Buying a property – residential or commercial – is a big decision. This is why it’s essential to do thorough diligence to ensure you’re making the right decision.
In this process, when you’re prospecting for a property, it’s a good idea to have a fair understanding of how to separate a good property from a bad one.
Here are four tips that can help you:
1. Does the property satiate the 1% rule?
A property should rent for at least 1% of its purchase price. So if you buy a house for $100,000, it should rent for at least $1,000 per month. For many investors, this is the core standard they use when evaluating investment properties.
The basic idea behind the 1% rule is to make sure your income property will generate income — or positive cash flow — every month.
To make sure your property will meet the 1% rule, you need to know two things: The purchase price and how much the property will rent for each month.
2. Consider the crime rate
Before you commit to buying a property, it is always worth carrying out some initial research into the area it is situated in. One thing you should definitely check is the crime rate as this will give you an idea as to whether or not it’s a safe area to buy in.
Check for serious and petty crimes. Also, factor if criminal activity is on the rise or declining.
You can usually find this information online by searching for ‘crime rates in [insert town name]’.
3. Are there sufficient amenities?
One way to find out if the property is good is to see if the area has a high number of features and amenities that might attract renters and increase the property’s valuation in the coming years.
Look for ample parking, air conditioning, on-site laundry facilities, and other desirable amenities. You can also talk to real estate agents to get their take on the neighborhood and local real estate market.
4. How much is it priced?
You can tell if a property is overpriced by comparing it to similar properties in the area — not just what’s close by, but also looking at prices in other cities and suburbs.
If there are no comparable properties nearby, it may not be an easy sell later on down the road.
Also, look at the current owner’s asking price compared with what they paid for it — if they paid a lot less than they’re asking now, that’s probably a bad deal for you.
Final words
These are four simple tips that can help differentiate a good property from a bad one.
If you’re looking to buy a property in Canada, you can also consult the best real estate agency. The top real estate agents in Canada can assist you with this decision, ensuring you pick a fitting property to buy.
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