Real estate comparables, or comps as they’re called, can be a real hurdle for some investors to clear. But, I’m here to tell you that it’s really not as complicated as you may think!
In today’s post, I’m going to share with you the factors that you need to consider when reviewing real estate comparables (by not taking these into consideration, you’re setting yourself up for trouble!)
Plus, I’ll also touch on how I get top dollar on my rehab deals while using these important comp factors AND the one mistake you should avoid.
We’ll look at these important criteria and steps in the comp evaluation process:
- Time of Sale
- Size and Amenities
- Narrowing Down
- Bringing Top Dollar
Let’s get to ‘em…
Obviously, location is a big deal in real estate on many different levels…
But, for our purposes, I’m talking about location as it relates
How do you know if an investment property is a truly GOOD deal?
I get this question often and the answer is…there are several simple, yet effective, ways to figure out if an investment property you’ve found makes sense as a deal for you.
Let me be very clear, it’s not about whether I LIKE the property. That has absolutely nothing to do with it!
Pro Tip: Take emotion out of the equation when evaluating an investment property.
You see…to me, these houses are simply inventory. In fact, some of the deals I do these days are on investment properties that I’ve never even seen.
For me, whether to do a deal or not is determined by looking at 5 significant factors – after I’ve used these to evaluate the property, I’ll know if it’s a good deal or not.
Now, let’s dig into the 5 factors that you should
I hear this question often, “Cam, I’m looking at a property but it’s a two bedroom home, should I avoid the deal or do it?” The reality is, there are scads of guidelines in the real estate investing world and a few hard and fast rules to follow, but one of your biggest guides will be what the real estate comps tell you.
When you come across a potential deal that goes against the known guidelines, and trust me you WILL, then it may be time to slow down, take a second look and perhaps reassess your options.
For instance, you don’t want to pass over a possible deal just because you turned a guideline into your unbreakable rule.
I have a case in point for today’s post where a potential deal goes against my own guideline of mainly dealing with 3-bedroom, 2-bathroom houses.
A student of mine asked me
Sooner or later, you’re going to have to pull comparables on the properties you’re considering buying. It’s an important part of every successful Real Estate Investor’s day…
So let’s define a couple of terms before we dig into this…
First, the “subject property” is the one you’re considering buying.
Comparables are your absolute best tool to determine the value of the subject property. Real estate agents and investors like you and I will “run or pull comps”, to determine and justify the value of a subject property based on comparable properties that have sold recently within the area.
In other words, properties that are near by with similar square footage, similar number of bedrooms and bathrooms, possible upgrades and other considerations…
Now, there are lots of factors that help determine if a real estate comp is indeed comparable, and you need to know these factors and apply them each time you look at comps