3 Qualitative Factors To Consider Before Buying Property
Q: We’re buying our first investment property. What are the most important factors you think we should consider? Dave, Bayonne, NJ
A: There are many factors, both quantitative and qualitative that you should analyze before you even make an offer to buy an investment property, Dave. I’m going to give you 3 qualitative factors that you should analyze and consider before you buy investment property:
1) The first qualitative factor is the local perception of the character of the neighborhood where property is located (i.e. is it family-friendly, quality of local schools, crime prevalence, proximity and access to transportation etc.).
2) The 2nd qualitative factors is the attractiveness of property to buyers and renters. All economic activity is driven by demand, so your ability to rent or resell a property is based predominantly on how attractive that property is or will be after you renovate to eligible buyers and tenants. Find out before you buy how attractive the property is right now to potential buyers and tenants. Sometimes, I advertise a property for rent online before I finalize a purchase to see how easy or difficult it will be find good tenants for it if my plan is to rent.
3) A third factor to consider is on a scale of 1-10 rate how the property stacks up to similar properties in the neighborhood. Before you buy a property, go see at least three similar properties for sale in the neighborhood—this will give you a valuable frame of reference to help you determine value.
Thanks for your question, Dave. For more real estate information and tips visit my blog at geraldlucas.com.