Real estate can be a very rewarding profession and a terrific investment. But to profit from it in either case, you have to have a good understanding of your target market. If you don't know when and what to buy or sell, you might as well be gambling. Here are some tips to evaluate your marketplace.
There are a great many online tools available today to give you insights on local markets. Yahoo Neighborhoods and City-Data.com can provide demographic details like crime rates, schools, and a wealth of other information. Google Maps and WalkScore can both give you details on neighborhood features. Sites like CBRE and GlobeSt can provide higher-level trends and developing news on real estate investment.
Once you've come up with a list of properties, you need to have a very good idea of what they're actually worth. For most homes, you get a good idea of the value by comparing the actual sales prices of similar properties that have been recently sold in that neighborhood. Replacement costs are used to value new structures, such as a guest cottage or stable.
Whether you're an investor or seeking investors, you have to calculate what you expect in profit. Many times there's maintenance or remodeling required to maximize salability. There will be costs like taxes, realtor fees, and insurance, or possible headaches with building codes and permits. You have to be certain your expected selling price is going to cover all this and still give a decent profit.
You also need to research price trends for the area. It's important to determine whether current prices are going up or down, whether this is temporary or a long term trend, and how that affects profitability. Even if you move fast, you can't expect to capture top dollar if values continue to drop. Don't forget that there could be very different trends for residential, commercial, and agricultural property within the same market.
Sometimes prices reflect national or state economies, but there could be local factors. If a long-term, major employer pulls up roots and moves to Mexico, there's going to be unemployment and dropping prices. But if a developer has plans for a new hospital or big shopping mall, there's going to be more jobs, more traffic, and rising prices. Take the time to skim news stories or check with the local chamber of commerce.
Whether you're a professional real estate firm or an independent investor, don't forget that we're living in a digital age. Start your research by locating the tools and apps that will make your decisions easier and better informed. Contact a realtor at a business like Keller Williams Realty if you have questions.