Making money off property

distressed properties or conversion properties.
I also discussed how one could find such properties and how to deal with them and the target areas for investment and the importance of specialising in a certain area.
We then went further and spoke about motivated sellers, the reason they are motivated to sell and how to spot them.
We spoke about methods of locating such properties that could be beneficial for the investor and the role of the preferred realtor.
After coming across your perceived motivated seller, it is time to start the process of seeing whether the property is ideal for the purpose one needs to purchase it for, that is to flip it.
It is important to design your own scorecard system which you would use to rate the success level of each of the important questions that you will need to ask to ascertain whether the property is ideal for investment purposes.
What is the Price?
This is the most obvious and the standard rating to use to assess whether the property falls within your budget so that one does not waste their time.
It is important to score any reply to this question with a special score system you would have designed.
Let’s say, for instance, we are using a 1 to 3 score system, if the price is below market value, then you could give it an excellent score of 3.
If the price and value are equal, then a fair market value of 2 will be appropriate. If above market value then the obvious value of 1 will be adequate.
What is the property condition?
This question is related to the first question and should be assessed with the price in mind.
For instance, it should be seen in the light of what is the property condition is vis-a-vis the price.
When it comes to this question, for the investor, getting a bad reply to this question is not a bad thing, but a negotiating hand that if used well can be a dealmaker.
If there is a fault on the property, ascertain whether it’s structural or cosmetic. The answer to this question helps as a guide to the decision you will make on whether to purchase the property.
Ascertain your strengths and focus on them, if your strength is mainly in landscaping, then identify properties that are in dire need of landscaping and improve them.
If it is painting or managing contract worker’s then go ahead and look for such.
One simply may just engage his realtor to assist him with the improvements then forgo the hustle of personally managing improvements.
What are the terms?
Although we do not find enough sellers on our market that are open to terms, this does not mean we do not have them, if the seller is motivated to sell enough, they might be open to a terms payment suggestion.
Working with your system of improvements and pricing, assess which terms will be better for you, while at the same time, assess whether the seller will be open to a relatively lower full payment offer since they are flexible enough to accept a terms payment.
What is the location?
This is a very important question that should always be considered with the price and property condition question.
Like I mentioned before, the investor who wants to improve a property to sell, has to find the Worst Property in the Best Road.
Location is also critical because some areas have a ceiling pricing; this is the highest you can price in that area before the potential buyers consider purchasing a property or in a better area.
Location verification can also give you a general idea of the property demand in that area including what type of property is in demand.
This will give the investor a general idea on how long the property will be on the market after improvements.
Is the seller highly motivated to sell?
We fully explained how to spot a highly motivated seller in last week’s article.
It is imperative to find out here the reason the seller is selling the property. If there is a special need the seller intends to meet then the investor must find a way of meeting that need and create a win-win situation for both seller and investor.
A full analysis on the answers to these questions will give the potential investor a clearer picture on whether the property is worth investing in.
Unless one is a seasoned property investor, avoid rash decisions on property investment for there is wisdom in seeking counsel.
l Vengai Madzima is a property consultant and analyst with Wisdom Properties. He can be contacted on 0772 468093 email: [email protected]