Comparable Pricing – Real Estate Investing – Part 10
This is Part 9 of my Real Estate Investing Series. You can view the first 8 Parts here:
Are you planning for your Future? Real Estate Investing – Part 1
Starting at Home! Real Estate Investing – Part 2
Maintain Your Leverage! Real Estate Investing – Part 3
Picking Your Investment Property – Real Estate Investing – Part 4
Location * Location * Location – Real Estate Investing – Part 5
Cash Flow Analysis – Real Estate Investing – Part 6 A
Cash Flow Analysis – Real Estate Investing – Part 6 B
Cash Flow Analysis – Real Estate Investing – Part 6 C
Cash Flow Analysis – Real Estate Investing – Part 6 D
Passive Losses – Real Estate Investing – Part 7
Gross Rent Multiplier – Real Estate Investing – Part 8
Capitalization Rate – Real Estate Investing – Part 9
When you go to buy a residential investment property probably the most common way of arriving at a price is going to be to look at comparable properties in the area. As this is a book primarily directed at begining investors looking at a residential invesment the price will probably be determined by comps. Even if you want to use another method, the sellers and other buyers will be looking at comps.
Comps will be based on the size of the home, location, lot size, and the quality of the home and fixtures. Once you determine if a particular home will meet your needs as an investor and what the purchase price will have to be you can use the Gross Rent Multiplier or Capitalization Rate to determine if it is a good investment. Even within the same residential housing market, depending on demands and the quality of the homes different investment properties will vary in investment return.
Remember our earlier chapters - Maintain Your Leverage! Real Estate Investing – Part 3 & Picking Your Investment Property – Real Estate Investing – Part 4.
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