Property Evaluation Skill: A Must Have For Real Estate Investors
Property evaluation skill is one of the most important skills that every real estate investors must have in this business. You can go on looking for properties to sell but without property evaluation skill you will get yourself into a lot of trouble before you know it. And regret will come later after you acted hastily on buying the property.
New investors would approach you with problems like this and this is not new. This is common in our industry especially with new investors excited to close a deal and overlooking one of the most important aspect in real estate investing. Property evaluation skill is a must and we as investors should really think about this. You can find deals if you really work hard, and in fact you can find great deals with a positive return of investment if you know how to properly evaluate a property. And there are not a lot of people who will willingly teach you this. Sometimes we have to experience to fail for you to learn the lesson. But we don’t want that so we have to consider all pros and cons before diving into the sea of uncertainties. Learn the skill of property evaluation. Be thorough and paying attention to every minute detail will help you in all your transactions. Do not be sure with everything. Value is what we are looking for in the property that we are buying. And you should be able to spot this with your initial property analysis. Then dig deeper. Make a checklist. This will help you reduce the risk of skipping something in your property evaluation. Consider the cost to fix, condition of the available items and so on. You can’t remember everything especially if your time is limited. Have a system in place and carefully review each item. If time is very important in this particular deal, property evaluation can be done quickly but do it thoroughly before you make the decision.
Exterior Inspection Checklist – you can use this in crosschecking items during property evaluation. The house that you are buying has hidden cost that is unknown to you. So you are going to inspect the exterior part of the house but remember it does not consider the interior part. So starting with roof and this is mostly the most expensive part to upgrade then check out the rest of the exterior items. Find out how old is the roof and so on. Here’s an example on what to look for:
Cracked caulk or rust spots on flashing.
Shingles that are buckling, curling, or blistering.
Missing or broken shingles.
Cracked and worn rubber boots around vent pipes.
Missing or damaged chimney cap. Masses of moss and lichen, which could signal the roof is decaying underneath. Black algae stains are just cosmetic.
Whatever finding you got, do not just ignore it. Do the math and see how the result of your property evaluation can affect your overall computation before you decide to submit your offer.
Interior Items Checklist – it’s a good idea to have this ready when you are doing the property evaluation inside the house as it gets pretty confusing especially if the house is huge. So while looking around make sure that you take down notes. Check out the windows, furnace, water heater, electrical, etc. Ask the questions: how old, does it need replacement, stains, cracks, renovation made in the past, etc. All these are essential to investing a property. And of course we have to consider the health, safety and operational costs for the homes air conditioning and heating system. Never leave a doubt.
Property Upgrades – during property evaluation consider the upgrades cost especially if you are looking at rehabbing the house. Kitchen and bathroom upgrades are most common. If you have no firsthand experience, take down notes and you can think about what to do when you are done. Pretend that you are cooking at your kitchen at home. How is your work surface? Is there enough pantry and cupboard? How about the age of the appliances? Bathrooms – how old is the water heater? Crack tiles? Is there enough storage? How about the lighting? Is the toilet and bath separate? Check all the details and check how soon you need to renovate.
You can’t go back to the property again and again. So write down everything on your first property evaluation. Make sure to take a camera with you it will help especially if you forget things easily. Try to be accurate with your details. This can be your first property visit so your checklist can help you tremendously the next time you evaluate a property. Develop your property evaluation skill because this is your ticket to success in the real estate investing world.