Part of searching for the right rehab property involves analyzing options to determine which one possesses the best value. Consider these steps to help you make a wise decision!

Step 1: Determine Your Geographical Parameters

When a property is functionally obsolete it is important to figure out if it can be salvaged. Set a circumference for your search to focus in on logical comps. When comparing potential investments within your set domain, keep in mind the square footage because it is a key factor in determining the properties’ value. A large enough floor plan gives you the ability to incorporate an additional bed or bath, ultimately adding value to your investment. A property that is only equipped for 2 beds and 1.5 baths is not going to lead to a successful rehab when it is surrounded by 3 bed/2.5 bath homes. Your final rehab should at minimum be comparable to the other’s in the neighborhood, but ideally possess something unique to draw extra attention to your property.

Step 2: Establish the Neighborhood Factors

Identifying detractors and adders allows you to evaluate which property holds the better value. For example, if a neighborhood has double yellow lines on the main street; that is a good indicator that it is a busier road. Therefore, having a negative impact on the property location. No set dollar amount is assigned to each negative/positive because it differs between neighborhoods, but it is important to know what connotation they give a property when looking at comps.

Step 3: Select the Appropriate Comps

Make sure the comps that are being chosen are the same across the board for each property so you receive accurate results. Both parties involved should agree how far back in time you are going to review details of each potential rehab. Reviewing the resent selling period of each house will provide you with the most relevant information. Going over previous “under contract” or “active comps” do not provide as much value since they are subject to change.

When comparing properties, you want to make sure you are paralleling similar characteristics. In conjunction, you want to make sure you are receiving your information for each property from the same platform. Keeping as many variables consistent as possible allows you to see the comparisons in the best light.

Comparing investment properties can be a hefty process to take on alone. Contact us today to have our educated staff help secure the right property for you.