As an investor, identifying a great deal is crucial to maximize your returns on investment. But how can you distinguish a great deal from an average one? Here are five indicators to look for when purchasing real estate in Southwest Michigan.
No Zoning Issues or Liens
Thorough research is crucial before investing in a property to avoid any zoning issues or property liens. Zoning issues can prevent you from using the property for your intended purposes. Additionally, purchasing a property with liens can become a significant financial burden as they would become your responsibility to pay, ultimately reducing your return on investment. Therefore, it is essential to verify the zoning status and check for any outstanding liens before making an investment.
No Expensive Repairs
Submitting an offer on a property is worth considering if it doesn’t have any significant structural issues, especially if the price is reasonable. Even if the property has a slightly outdated kitchen, it may not be necessary to replace it immediately if it is still functional and in good condition. It is not essential to follow the trend of remodeling every kitchen and bathroom in every investment property. You can choose to remodel them gradually as your budget allows, even if it takes several years. The primary focus should be on ensuring the property is profitable before investing any more money than necessary.
Priced Near Assessed Value
Purchasing a property priced at or below the county assessed value can potentially offer a great deal, but one must exercise caution. Properties priced significantly below the market value may have underlying damages or other issues. Although the seller may be motivated to sell a great property, it could also be a bank-owned property with structural or other damages. Generally, the market value of a property is 10-25% above the county assessed value. It is important to assess the property thoroughly to ensure a wise investment decision.
Passes 1% Rule of Thumb
Real estate investors typically use a rule of thumb to determine if a property is a good deal or not. According to this rule, the property’s monthly rent should be around 1% of the purchase price. For example, if a property is expected to rent for $1,400 per month, the ideal purchase price would be approximately $140,000 in order to make a profit. However, to utilize this rule effectively, you must analyze the fair market rental potential of the property.
If a property has good curb appeal, it is an added bonus that can save you a lot of money on renovation costs. Additionally, it is important to examine the overall shape of the house and make sure it looks solid and square. A straight roofline is also crucial to curb appeal, as it can affect the overall composition of the house. Be wary of any differences in siding treatments, as it could be a sign of structural issues caused by an addition.
If you’re a real estate investor seeking a favorable deal when purchasing property in Southwest Michigan, look no further than I Buy SW MI at (231) 392-3262. Our team will do the heavy lifting for you by searching for investment properties that meet your desired specifications. Simply provide us with the features you’re seeking in a property, and we’ll provide you with a selection of options to choose from. Don’t miss out on this opportunity to invest in real estate – contact us today to get started!