4 Simple Tests To Find Good Real Estate Investment Properties

You're driving along the road when you spot it. There in the middle of a shaggy lawn sits a disheveled property. It may need a good coat of paint, or a shutter straightened out, but it's easy to see that with a little work it could be a little gem of a property. Best of all, sprouting in the middle of the unkempt grass is a For Sale by Owner sign. It looks like the perfect fixer-upper, but how do you know for sure?

First, consider your reason for buying. If you're looking for a property to 'flip' - to buy low, fix up and sell for a profit - there are a number of things you'll want to take into consideration. If your intent is to buy it as rental property, there's a different set of consideration, and if you're looking for a home of your own, there's yet a third. Let's assume, for the sake of this article, that your intent is to flip the property for profit.

Test 1: The Neighborhood Test

Before you invest another hour, do yourself a favor and take stock of the surroundings. The old saying in the real estate business that the three factors in selling a home are 'location, location and location'. What is the location like? No matter how wonderful the property is, you'll have a difficult time selling it for top price in a bad neighborhood. That doesn't mean that it's a bad property - depending on how low a price you can bargain, you still may be able to make a decent profit from it.

Another consideration in the Neighborhood Test is a bit more subjective, and you'll have a feel for it if you're local and keep an ear to the ground. Is the neighborhood in transition? A neighborhood that is on the cusp of a renewal effort like gentrification can be a great place to invest, as long as the upward momentum continues. An area that is on the outskirts of new development will often benefit from that as well. If, on the other hand, the neighborhood shows signs of slipping into a decline, you might want to pass the property by. If you can see that the neighborhood is slipping, so will prospective buyers.

Are there 'amenities' nearby? Depending on the neighborhood and your prospective market, those amenities might include a neighborhood school with a good reputation, a corner store within walking distance, or a park right down the street. In one Massachusetts city, for example, the value of properties in a formerly depressed neighborhood skyrocketed when a local university announced a commitment to provide full tuition to the children of neighborhood residents, and provided additional incentives to home buyers within several blocks of their campus. Investors who bought just before the announcement realized excellent turnaround on their investment.

Test 2: The Pricing Test

Is the home listed with a Realtor, or is it a FSBO? How realistic is the asking price? Is it in your price range? Can you work out a low or no-money-down financing option? How open to negotiation is the seller? Will you be able to realize a profit after making needed repairs?

Test 3: The Condition Test

This is one of the most important tests. The property you want to buy doesn't require any extensive, expensive repairs. It should be structurally sound, without any major plumbing or electrical problems. If you're just starting out, you'll want a property with repairs you can manage yourself - repainting, refinishing floors, a little landscaping. If the property requires more extensive repairs, it will cut into your profit, or eliminate it altogether.

When you view the property, really kick the tires. Look for indicators of hidden problems. Here are a few things to look for:

• Moisture stains on walls and ceilings could indicate plumbing problems
• Little piles of sawdust near corners or woodwork could mean termites.
• Separations between floor and wall, especially outer walls which could indicate structural problems.
• Lift tiles in suspended ceilings to examine the ceilings above for loose plaster, moisture stains and other indications of problems

Test 4: The Title Test

The final test is the title test. Be certain that the title to the property is clear, with no liens or attachments that could sour the sale. If there are, and you still want the property, work out a conditional sale, where your purchase is contingent upon the liens being satisfied.

If the property passes all of the above tests with flying colors, congratulate yourself. You've got yourself an investment property that could turn a pretty profit for you.

Andrew is the web owner of Real Estate Investment Tips, a website that provides informational guide on real estate investment, foreclosure home and more. You can visit his website at:http://www.buy-and-sell-house-fast.com/

---

Make Money With Room Rentals

I don't know why I didn't do it sooner, but... Read More

Renting a House

Renting a house or a room in your home is... Read More

Finding Southern California Real Estate Foreclosure Property

Southern california real estate foreclosure:If you want to find southern... Read More

Greed Can Cost You Your Shirt!

The proper action when things are going well is to... Read More

How to Build a Real Estate Investing Power Team

As you continue to read about real estate investing, you... Read More

Tax Free Exchanges: Watch out for the New Residence Rules

On October 22, 2004, President Bush signed tax legislation that... Read More

Refinance Rental Property - Dont Sell It

You own a rental property for years, and never see... Read More

Where is Florida Investment Property

Florida Investment Property ? Why Investing is a Wise Decision... Read More

I have a buyer for your property and I can sell it now!

A Realtor has just talked to you and said, "I... Read More

Real Estate Web Design - 3 Items You Must Include on Your Site

Real estate web design requires you to do things a... Read More

Business Credit Card Dirty Tricks

My system teaches people that the proper use of credit... Read More

Interior Design Secrets for Selling Houses

New concepts in Interior Design Psychology are helping home sellers... Read More

Investment Property Part I: How Not to Become a Slumlord

After riding the ups and downs of the stock market... Read More

Investing in Real Estate Like a Stock

A REAL ESTATE STOCK PLANGetting out of the bleachers and... Read More

Property Investing

Wrapping a property is a simple concept that can create... Read More

Dealing With Difficult Tenants

When managing residential properties one bad tenant can often undo... Read More

Real Estate Growth: How Long Will It Last?

There has been speculation in the media recently about the... Read More

Hurricane Katrina And The Impact On Real Estate Prices

In the wake of Hurricane Katrina's wide path of destruction,... Read More

How to Choose Your Real Estate Lender

Because you need quick action when applying for a real... Read More

Do I Have To Buy Real Estate Through An Agent?

Sometimes when we are very busy professionals and very rich... Read More

Selling Your Home: 5 Deal Killers That Are Lurking In Older Homes

You've listed your home for sale, you have a Buyer... Read More

Howard Stern is Hot in Real Estate

Howard Stern has over 20 property related files in Queens,... Read More

How I Became a Real Estate Investor

Recently I closed on the sale of two homes. They... Read More

Guide To Finding Maui Waterfront Property

Have you ever dreamed of living in a spectacular tropical... Read More

Financing Houses

What Real Estate Lenders Look ForLenders control many programs --... Read More

Apartment Financing Explained

So you're interested in entering the world of property management?... Read More

How To Start Investing For Financial Independence, Part 2

Last week, we started a multi-part series about how to... Read More

The Listing Agents Role in Selling Your California Home

Advertising to the "Public"Every home seller likes to be assured... Read More

Stay Motivated With REI Till The Deal Comes

I know many investors step into the game of real... Read More

Basic Tips for First Time Home Buyers

Choosing a first home can be a daunting task, but... Read More

Apartment Loan 101

So you're interested in going into business as a property... Read More

How Much Should I Pay For This House?

We probably answer this question for someone a couple times... Read More

What Is a CMA

"CMA" is an abbreviation real estate agents use for a... Read More