Investing in real estate isn’t a decision you take overnight. It’s a calculated decision, one that you take after closely monitoring the real estate market. You need to analyze the real estate market and then decide to invest.
However, if you see a good investment opportunity, you also have to make sure you’re ready to invest. Michael Gailliot Homes brings you tips on monitoring the market and signs on when to invest in real estate.
Tips to Monitor the Real Estate Market
Examine the Historical Data
Review online reports on the real estate market’s performance from the National Association of Realtors (NAR) to discover the types of properties on sale and their price.
Look at the Target Market and Neighborhood
Once you have selected the area, you need to canvas the area to learn more about it. You need to obtain the following information:
- Overview of the real estate market
- Population data and employment growth
- Education levels of major employers and employees
- The city and metro area’s local housing real estate market activity
- Past, present, and future real estate market trends for rental properties
- Quality of life rankings for forecasting future demand for properties
Gather Unbiased Data from Several Sources
Go online to gather unbiased data from several different sources. Some resources to obtain data include:
- Community websites
- Local newspapers
- Social media
- Investment clubs
- Online investment portals
Understand the Market Factors Affecting Investment Strategy
Are you interested in a long-term buy-and-hold strategy or properties with rapidly increasing prices? You’ll choose a market to invest in once you have chosen your investment strategy. After that, you need to know the market factors that can influence your investment strategy. They include:
- Types of properties in high demand
- Most active investors and real estate agents
- Percentage of rental homes
- The location of the major employers
- Housing inventory stock
- Identifying the local home wholesalers
Perform Market Analysis
When you’re performing a real estate market analysis, use the recent sales prices instead of the asking prices of properties currently on sale. The listing price is what the seller wants to get for their home, whereas the final sales price is what the seller receives after the sale of the home. Follow these steps to perform a real estate market analysis:
- Research the neighborhood amenities and quality
- Get property value estimates for the neighborhood
- Choose six comparable properties for your real estate market analysis
- Calculate the average price of comparable properties
- Adjust your real estate market analysis as needed
You need to continuously monitor the real estate market to know when to invest in real estate. Additionally, you also need to know if you’re ready to invest in a property on sale on the market.
Are You Ready to Invest?
- You’re financially stable and can make a down payment on the property between 3% and 20% upfront. The closing costs will range from 2% to 5% of the property’s final sales price. Consider other payments related to the property, such as HOA fees, property taxes, homeowners insurance, etc.
- You have accumulated enough equity in your current home. You can use your current home’s equity to obtain a home equity line of credit or a home equity loan and then use it to invest in another property.
- Learn if the neighborhood is experiencing a buyer’s market or a seller’s market. A buyer’s market is when several properties are on sale, but interested buyers are few. A seller’s market is when fewer properties are on sale, but interested buyers are more. If it’s a buyer’s market, invest in the property, as sellers are likely to sell their home at a lower price.
- Invest in real estate during winter, especially near Christmas time, as the competition is less. You can also invest in real estate in spring, as several properties go on sale during this time. If you want to buy a property in spring, ensure you have cash or are pre-approved for a mortgage.
Do You Need Help Finding Lucrative Investment Opportunities in Northern Virginia?
If you do, look us up! Michael Gailliot Homes can go to work in finding properties on sale in the neighborhood of your choice in Northern Virginia.