A very important member of your investment team, is your real estate broker . If you or your realtor come across a particular property investing opportunity that may be of interest to you , your realtor will furnish you with comparable properties other properties to compare with .
A real estate agent will use the Multi Listing Service listings to compare similar properties that have been sold in the last 6 to 12 months . Plainly , the closer the date of the comparable properties is to the present date , it will show a more precise reflection of current prices.
When doing a comparable, lay the information out in front of you and then figure out what amenities one property has that the other properties don’t. You then add or deduct the value of the amenity or lack of it.
As an example, let’s say , we have2 properties that are very similar. Both properties are the exact same in every way, except, one has a two -car garage and the other doesn’t have a garage .
The property, with the garage, sold 6 weeks earlier for $85,000. The other property, without the garage, has an asking price of $80,000. We now know that a two -car garage would give the property an extra value of $5,000 and that the property, without the garage, is priced accurately.
Always get a home inspection done or a very reliable handyman to go over the property and get a preliminary title report as part of you evaluating deals.
Create a property analysis financial statement . Once you have established the fair market value of the property, multiply that amount by 70%, then subtract your estimated costs for repairs. Your number would be the price that you would put up. A 20% profit or more should be your goal
To calculate the offer price on the $80,000 property (fair market value):
$80,000 x 70% = $56,000
Now, we will say that the repairs are $6000, subtract that amount from the $80,000. For this property, our offer would be $56,000-$6,000=$50,000. If you put in an offer of $50,000, your profit would be
$30,000. A very nice profit .
A realtor will be able to provide this advantage and many others . So, make sure you can find one that you like, trust and is experienced in investment properties when you are looking at buying Canadian real estate investment properties.
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