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Is this a good investment property?

Colleen Kulikowski August 26, 2016

Is this a good investment property? I hear that many times. Think about it. How many times have you seen a run down vacant property in Western New York and thought that would be a good investment? But if you never have invested before how does one know?

How much profit you should allow whether you are buying a fixer upper or buying an investment property that is already rented or ready to rent or sell in Western New York. There are many factors that go into deciding if a property is a good investment or not. Don’t forget the most important thing to remember LOCATION! LOCATION! LOCATION!

But for now let’s talk raw numbers and Real Estate Investment. There are as many different ways to analyze a Real Estate transaction, as there are ways to put a deal together.

Options to you include:

  • There is software programs that will calculate your internal rate of return every year from now until the property is ultimately paid off and beyond.
  • You can use spread sheets that you can buy to do the same thing
  • You can use a calculator or a simple pen and paper method

No matter how you calculate it, there is something you need to remember. They all have one thing in common. It is an old computer term called GIGO or garbage in – garbage out. Why is this important to you? Well it will do you no good if you are analyzing the wrong numbers in your Western New York Investment property.

If you are looking at a fixer upper then you don’t want to have any more than 70% of after repaired value invested. After you purchase and repair you will have 30% equity which gives you options like:

  • Sell it
  • Refinance it and pull out some cash
  • Rent it and hold it
  • Lease option the property to someone

So what goes into that calculation? Well if you only calculate the purchase price plus the repairs and subtract the new sale price in a flip you are not calculating the true profit on the property. Do you know what numbers you need to put into that calculation? Things like:

  • Closing costs for the purchase
  • Carrying cost of any mortgage
  • Taxes and Insurance
  • Realtor Fees for the sale and the associated closing costs
  • Your time and effort

What if you don’t have to fix up the property and you are going to rent it right away? What makes a particular home a good or bad investment? Want more information regarding Investing in Western New York, feel free to give me a call at (716) 650-0051…

How About One Of These Homes?

All statistics are gathered from the Buffalo Niagara Association of REALTORS®.

For more information – call our J. Philip Real Estate Team at: (716) 650-0051

Thinking of selling your Western New York home? Interested in finding out the current market value of your single family home, condo or investment property? Then call us at (716) 650-0051 to discuss what is happening in today’s Western New York Real Estate Market. We would be happy to give you a personalized Comparative Market Analysis for your home or assist you to purchase a home.

Properties found on this Web site may be listed with a brokerage other than the owner of this site and are displayed here via the Internet Data Exchange (IDX) system of this broker’s MLS. All information deemed reliable but not guaranteed and should be independently verified. All properties are subject to prior sale, change or withdrawal. Neither listing nor displaying broker shall be responsible for any typographical errors, misinformation, misprints, and shall be held totally harmless. © 2016 Western New York Real Estate Information Services (WNYREIS), LLC. All rights reserved.


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