By Lee Strauss
We all wish we could see into the future to determine whether the purchase of a certain property is going to work out or not. It’s a challenge to know whether or not you should take the plunge and buy that property you’ve been debating over.
I know because I've been there! Experience counts and, after you’ve gained the experience and knowledge of what to do, it gets much easier.
But there five simple rules to follow when selecting a property:
The first rule I follow in any property selection is: It’s strictly business. Never, under any circumstances, let the romance of being a landlord or house flipper cloud your judgment. A good deal is based purely on the numbers – and they don’t lie. But how do you know if it’s a good deal or if it’s a property that will work?
Find out all you can about the area, the house, the local rental rates, approximate carrying costs, legal fees, closing costs, taxes, utilities, etc.
Once you’ve learned all you can about your target area, learn how to run the numbers to analyze the property. Do this quickly and, once you have, be confident in your knowledge and pull the trigger. If it’s a worthy property, you are not the only one who is analyzing it.
Have a home inspection completed by a reputable home inspector. Ensure you address any defects and add any additional expenses that may be required to your cost analysis. This way, you will limit any unexpected expenses.
I find it works very well to make up spreadsheets or checklists and follow them to a ‘T’. This way, nothing is forgotten. Practice this on some sample properties to gain experience. After a while, you will get to know the numbers without even plugging them into your spreadsheet.
You can only analyze a property so much. Be confident and put your new knowledge to use.
Lee Strauss is a real estate investor and firefighter based in Kitchener, Ont.
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