When buying a property, keep in mind the reason why you are making that purchase. Either you are a homeowner or you are an investor. Let us differentiate the two. The homeowner is concerned about how liveable the property is. The homeowner is not the type of person that looks at the potential value of a property but looks at the current value. The current value of a property can be evaluated based on how well the property’s condition is in. The lighting works, the fixtures are perfect, the paint still looks good, and etc. These are a few things that go on in the mind of a homeowner which is why when presenting a certain property to a homeowner, they make sure that everything is in top condition. An investor, on the other hand, looks for the potential value of a property. Sure there are repairs to be made and a lot of installations to be dealt with but once a real estate investor sees a property, that person starts to imagine the potential value and starts planning on how to reach that value with the strict calculation of how much the real estate investor is going to spend. The best real estate investor can imagine the highest possible value a property can reach and automatically plans on how to get there.
Here are a few pointers on how to spot a gold mine:
Finding the worst looking house in the best looking community is usually a goldmine for the best real estate investor as he knows that since that property is the least attractive, that real estate investor can get that property for a really good deal and since the surroundings are promising, he has assurance that once he is able to repair and repackage the property, the value of that property can appreciate to a great value.
The conditions of the house are important. Some houses are damaged beyond repair and those properties although have potential might just end up causing you more expense on repairs rather than being able to appreciate in value.
Some people think that the direction of a property can be determined by imagination alone but there is actually a few things you can do to find the direction of a certain property.
Looking at the history of a certain property can tell you how the property appreciated or depreciated in value and will also give you ideas on what to do to appreciate the value of that property.
- Current state
The current state of the property is a good measurement as to how far it is from the property’s previous value or how far it is from the potential value.
This is what we were talking about earlier. Comparing the past, present, and future allows you to take a peek on where you are on the property’s value and how much you can possibly make should the property appreciate.