You can’t control every aspect, so you have to control what you can.
1. Buy a distressed sale if you are willing to do some work.
2. Don’t buy the most expensive house in your neighborhood.
3. Avoid functional obsolescence
a. On a busy street
b. Back up to major highway or future development (Page extension)
c. Improvement that is abnormal and may make it tough to sell
4. Location, Location, Location
a. Convenient to area
b. Quality school system
5. Availability of owner occupied buyers that can qualify for a loan.
6. Study and understand the trends
a. Housing supply (inventory)
b. New household formations
c. Future of interest rates (affordability)
d. Follow the experts, become the expert, make your own prediction
What about houses with a pool?
How do these rules change for buying an investment property?
This is assuming a long-term approach, like a rental property. Appraisals will always use the Sales Comparison Approach. However, the income approach becomes important when selling a rental. Investors will want to know how much cash-flow can be created.
Segment Audio:
Podcast: Play in new window | Download
