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How to Evaluate a Property in 60 Seconds

When looking at investing in property, it is easy to become caught up or overwhelmed by the numbers and documentation surrounding the purchase. More often than not, people will spend an inordinate amount of time trying to evaluate the property by crunching mortgage rates and other numbers, only to realize that they should definitely not invest in the property. This is an incredible waste of time and you could be missing out on your ideal property while you try and work out all the details of the unsuitable one.

 

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When looking at investing in property, it is easy to become caught up or overwhelmed by the numbers and documentation surrounding the purchase. More often than not, people will spend an inordinate amount of time trying to evaluate the property by crunching mortgage rates and other numbers, only to realize that they should definitely not invest in the property. This is an incredible waste of time and you could be missing out on your ideal property while you try and work out all the details of the unsuitable one.

It really doesn’t have to be that complicated, and this blog post will simplify the process and teach you how to evaluate a property in 60 seconds:

 

Don’t waste time

 

The most important thing to remember when you are evaluating a property, is that you mustn’t waste time. Your agent may have sent you a whole bunch of different properties that they think will be suitable for you. The truth is that only a small number of the properties are worth considering. You could spend the whole day calculating the numbers, you can do math until you are blue in the face, but you are simply wasting your time by doing this for every property.

Identify a property that you really like, in an area that is either already very desirable or which you know is on the rise and you can then eliminate a whole lot of properties from those that you have to consider. This means that you only have to crunch the numbers for a few properties, rather than a lot – which will undoubtedly save you some time.

 

Weigh up size to price

 

When learning how to evaluate a property, you need to learn to look at a number of different angles. The size of the property in comparison to the price is an important ratio to consider. You don’t want to overpay for a one bedroomed place, when the price could have fetched you something a bit bigger. This ratio is easily worked out without getting involved in complicated calculations. All you have to do is simply compare the size of the property with other houses in the neighbourhood and make sure that the price you are paying is pretty much on par with the others.

 

Weigh up price to area

 

Another important aspect to consider when learning how to evaluate a property is to make sure your property is priced similarly to those in the rest of the neighbourhood. Housing prices obviously vary from area to area, and while you may get a bargain for a large house in a less popular area – you are likely to pay a lot more for the size in an upper class area.

Compare the price of your house to others of a similar size in the area and make sure that it reflects the same sort of price tag as the rest of the ones in your neighbourhood. If the property is going for a lot more than the average in the area – chances are that it is overpriced and won’t be worth the investment. These houses can be quickly identified and discarded in your search for property.

 

The 1% rule

 

When it comes to crunching numbers, we are firm believers in the 1% rule. While you may be thinking that it sounds quite complicated, it truly isn’t and in fact, only requires you to know two numbers: the price of the property and the rental income that you will be able to get for it per month. If this works out at around 1% then you have got a property that will have a good cash flow and is worth investing in further.

For example if the property is up for £150 000 and you know that rental in the area is around £1 500 a month – then you are exactly on the 1% mark and the property is then worth investing in. Of course if you can get higher than the 1% rule then that is the best bet and you will be sure to have a property that has an excellent cash flow.

So, now you know how to evaluate a property in no time at all, which means that you will be able to save yourself many hours of crunching numbers and other frustrations. Another great thing to consider when investing in property is purchasing overseas. Spain is an option that is almost always a great investment – low house prices coupled with high numbers of tourists, makes it the perfect place to buy property.

If you are considering investing in property, have a look at our portfolio of property for sale Costa Blanca and make sure you purchase a property that doesn’t just make you money but that you also absolutely love.

 

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