For products that are plentiful,
transacted often, and largely the same as each other, determining market value is really easy.
But purchasing a home is typically not
like buying tomatoes at the grocer.
Each property tends to have features
that make it unique.
Even two houses, side by side in the
same street could be valued differently because of their individual attributes.
To make things even trickier, the
property is typically not transacted frequently, so it may be hard to find a
recent sale of a home similar to the one you’re interested in buying.
There is no "right" price
Property is unlike most other things
that you buy - there are no set prices.
Buyers and sellers must negotiate a
price that is acceptable to both of them.
While the asking price is a guide of
what the vendor would like to achieve or what the selling agent would like to
get, for you the asking price is only a rough indication.
To determine how much a property is
worth you need to check all the very recent comparable sales, the property’s
intrinsic value, and then also determined the following 3 figures:
What price do I want to pay for the
property?
What do I consider the market value to be?
What price am I prepared to pay and
when am I prepared to walk away?
By the way... don't even consider
buying cheap properties.
Your future financial freedom will
depend upon the quality of your assets, so even though a property may look
cheap at the moment, it will most likely restrict you from developing
substantial wealth in the future.
You can't really expect a first-rate
return from a secondary property.
Fact is…you will never be able to
replace your income with the type of cash flow you get from cheap properties.
For example, cheap properties in the
outer newer suburbs or in regional locations may offer higher yields as, in
general, capital growth will be lower, but in the long run this type of
property is expensive because it won’t enable you to achieve your financial
goals.
So look for locations where not only
the local owner-occupiers are more affluent, but also where tenants can sustain
rental payments and rental growth.
Your future income and prosperity will
be tied to your tenants’ future income growth and their ability to keep paying
you higher rent.
If you think about it, your rental
increases will be your future income.
RealRenta has all the
tools that a property manager has but for less than ¼ the cost of a
property manager.
Join now and the cost
is less than a cup of coffee a week to manage your rental property
RealRenta also has a
free vision, so why not check it out
Jason Gwerder
Friday, 27 May 2022
