Hey everyone,
This is my first post and I'm excited to have found this forum, I've been lurking for awhile and there is so much value it's insane.
I have been reading everything I can about appraising residential properties for maximal potential appreciation with minimal risk of vacancy. From many of the posts on this forum and some real estate investing books I put together a checklist to run on properties that I am interested in. I am hoping to make the process as systematic as possible; since I am new to the game I have zero confidence in gut feelings. Here's the checklist:
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Each factor is weighted differently depending on how much impact I have heard it could have on appreciation and vacancy rates, and on how objectively it can be determined. My question is for anyone that has experience in real estate investing (especially residential) - do you follow a similar system? Would you weigh the factors differently, and are there factors you would not bother including? This would obviously be in addition to running the numbers on expenses, ROI, NOI etc.
I'm a big numbers guy and work in residential real estate. So, with that said this is a completely unnecessary quantitative analysis. None of those line items will give you cash flow and it's teetering toward action faking.
Here are the numbers that are important:
Purchase price
Down payment
Repair and maintenance cost on the property
How much will it rent for
What's my vacancy cost
How much for a property manager
If you're wanting to do an analysis on a specific market then look at two things. First look at avg sales price. Then, look at rents for the same type of properties and calculate monthly rent. Divide monthly rent by sales price. You want to around 1% or more and no less than 0.90%.
You could also calculate the avg sales price per square foot and divide by the avg monthly rent per square foot. Might be more of an accurate gauge of the rental market.
These numbers do not have to be very exact but a general sense of what the market is doing.
All this stuff about job market growth, etc is not necessary to quantify.
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