6 THINGS EVERY REAL ESTATE THAT YOU SHOULD KNOW
Those who
consistently make money in real estate know
the market. They know the location and the history. They know what new
developments are planned. They know the transportation and the schools. They
know everything about the area where they invest. They have to know it all.
Staying ahead
of the competition in real estate investment means doing your homework. If you
are new to the business, it can be daunting, but in this article we'll teach
you five tricks that the old pros use to get ahead of the trends instead of
chasing them.
Study Local Pricing
The first
things to study are the current price trends
in the area. For example, a potential investor should look to see if the price
of homes is accelerating faster in one area than in others. Next, check to see
if the average home price is more than in other neighboring towns. This will
provide an idea of where the biggest demand is. Another reason to study these
trends is that, over time, you will start to develop a sense for which prices
are "fair" for certain properties and which are overpriced. For
individuals looking to buy properties at the lowest cost possible, this
knowledge can be invaluable.
Realtors and real estate
agents are a terrific source for this information given their access
to the Multiple Listing
Service (or MLS). The local newspaper, the internet, and the town hall
may have a record of recent sale prices as well.
Get Pre-approved for a Mortgage
There is a
host of benefits you can enjoy by getting pre-approved for a mortgage. Chief
among them are financial benefits. For example, most lenders will lock in an
interest rate for you once you are pre-approved for a mortgage. This let's you
enjoy the benefits of a lower interest rate if interest rates rise while you're
house hunting. Further, if you are able to be pre-approved for a mortgage prior
to finding your dream home then you become a preferred buyer in the eyes of the
seller because you've demonstrated you have serious financial backing.
Look for a Catalyst
One sign that
an area is up-and-coming and that it will be desirable in the future is the
development of new infrastructure.
When you see new roads and schools being built, it's a sign that the community is
set for a growth spurt. Investing in a growing community can be very
profitable. In addition, certain types of development, like new shopping
centers, may be extremely attractive to homebuyers,
and may also help keep the tax base low.
Spotting new
developments can be as easy as looking out your car window as you drive by.
Telltale signs of land clearing, surveying or the beginnings of construction in
and around major roadways are pretty big tip-offs. Also, look for widening of
traffic lanes, the installation of turnaround lanes and the erection of new
traffic lights. All suggest the possibility of increased traffic flow.
Next, visit
town hall at the municipality or the county level, and speak with the road and
the building departments. They should be aware of any major projects slated to
begin in the area, and they may even be able to provide you with a connection at
the state level so you can find out if any state-owned roads or properties are
slated for development as well. Real estate agents also have a general idea of
what new projects are about to be undertaken.
Explore Low-Tax Alternatives
If there are
two towns side by side - one with high property taxes (or
with progressively rising property taxes) and the other with low property taxes
- the one with the lower taxes will usually be more in demand.
Real estate
agents can help you determine which areas have the best and worst tax
structures. In addition, a simple call to the local tax assessor can
reveal how much the town charges in taxes per $100 of house. The assessor can
also let you know when the last time the area was evaluated by the township.
Also watch to
see if a reassessment is
set to take place in the near future, as it may mean that property taxes are
about to go up. Beware of towns and communities that are becoming overcrowded.
Signs include schools filled to capacity and inferior roadways. This could mean
the town will have to do some major construction to accommodate the influx of
people. And how do they pay for that construction? Tax dollars.
Check the School Rankings
Nearly every
state ranks its schools by how well students in each district fare on tests in
math and English. Sharp-eyed investors should look for schools that are moving
up or are atop the list. These areas are often desirable to parents. Access to
quality education is a big selling point to new home buyers.
Watch the Outskirts
If the
properties in a major city or town have become overpriced, the areas on the
outer fringes most likely will soon be in demand. Areas in close to major bus
and rail transportation are even more desirable Nearly any area that is about
to install a major train stop or a new major bus route will see its proverbial
stock go up in value.
To find out
what's planned, you can check with the local railroad or bus company to see if
they will be expanding service in the area. The local town hall or planning
department will also have this information.
The Bottom Line
It pays to do
your homework and to tap local resources to determine which areas are hot now
and, more importantly, which ones will be hot in the future. Much of the
information is out there and free for the taking. You just have to be willing
to do the leg work.
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Article Source: http://www.investopedia.com
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