What is My Property Worth?Posted by Monte Davis on Wednesday, May 16th, 2012 at 4:07pm.
This will come as no surprise to anyone that has been stuck on MoPac in the morning, but Austin was recently recognized as the Second Best Real Estate Investment Market in the country by Realtor.com - Just behind Tucson, Az., and seriously, who wants to live in the desert? With plenty of open green areas, an influx of high tech jobs (Welcome New Apple Campus!) and no state income tax, it is easy to see why people are flocking to our fair city. Additionally, Austin's potential for price growth is one of the best in the nation - and the median list price of $229,500 is about 12 percent higher than just one year ago.
With all this attention, many investors are taking this opportunity to cash out. Unfortunately, I'm seeing a lot of sellers making the mistake of undervaluing their property. Setting the best listing price for your property is crucial to making the most of your investment. - And all too often a matter that is rushed through.
Here's an example of what I'm talking about. Let's say your property has a total rent of $1,800 a month. Many listing agents speed through the basics, either because they don't know better or just to get the listing. They will work up comparable properties that recently sold and apply the 1% theory. Meaning, if the property is generating $1,800 a month in rents, then the property's worth $180,000, +/- a few thousand depending on location and property condition. This would be a costly mistake.
You and I both know there's much more to it. Research and strategy plays an extremely important role.
- Rents - Are they at market value? Rents are on the rise right now and many investors are missing out. If your rents are below market value it might behoove you to hold off until you can get them up to par. If the property is vacant, get it rented unless you are targeting an owner occupant.
- Location - What's the highest and best resale value for the property? Your property could be appealing to an owner occupant. An owner occupant buyer is inclined to pay more for a property than an investor. Investors put more emphases on income rather than the desirability of living there. How about appreciation - What's happening around your property? Another key factor to add to the marketing equations.
- Tenants - Are your tenants running sales prevention? In most cases, a good conversation with the listing agent can help grease the skids and smooth ruffled feathers.
- Property Management - Are they pro-active? A solid property manager is a strong selling point to buyers looking for turnkey properties.
- Condition - Are there deferred maintenance issues? Putting a little money into your property will net you a higher return.
- Documentation - Do you have good documentation showing Rental History and Expenses? Having documentation to give to the buyer will add peace of mind. Many buyers will pay a little more for a property well documented.
This sounds corny, but you have to Strategize to Maximize you profits.
Bottom line is, the housing crisis is all but over, at least here in Austin. Right now is a great time to buy, sell, or upgrade your investment portfolio. Knowing when, where, and how to invest is vital to your success. Save your stress for fighting traffic and give me a call.
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