Looking back at the average annual home price increase has some investors doing a double take. The increase hovered around 4.3% since 1991, but ballooned in the last few years to 18.8%, according to the Federal Housing Finance Agency.
As an investor, how do you use this information to purchase a property that will generate a profit? One important step in meeting that goal is to evaluate the housing market and conduct a market analysis.
Rental valuation in Cypress, TX requires assessing a property by comparing it to other properties in the area. Stick around as we lay out the steps to comparing home prices and calculating the price per square foot in this guide.
Conduct Thorough Market Research
Do not take any action until you research the property you're considering. What are your goals and ideas for the property? Do not end up with a money pit.
Are you purchasing the property for long-term or short-term renters? Long-term tenants give you a consistent stream of income, but short-term tenants allow you to raise rent prices for busier times of the year and between short-term leases.
Find out all you can about the area. Look at factors that may draw renters to the area. What are the amenities? What is the school system like? Are there restaurants and shops?
Do a Risk Analysis
Property managers in Cypress, TX always tell their clients to plan for potential risks and do what they can to prepare for them. The best way to protect your investment is to look at factors that can fluctuate.
Things like gas, electricity, property taxes, state and local laws can all affect your bottom line. You even have to look at local employment rates, quality of applicants, and government real estate policies to protect yourself from taking a loss.
Assign each risk factor a number, with the highest number matching the highest level of risk. A property with a higher score may not be worth buying.
Use Area Comps
Just as a listing agent looks at comparable homes in your area to come up with a listing price when you're selling, you should look at comps when buying.
Look at other properties in the local market. How much are they getting for rent? Does that match up with your expectations for cash flow?
Make a sales comparison. Find similar properties and calculate the selling price per square foot. Look at what's sold in the last month or so for accurate comparisons.
Remember to consider whether the location matches up with the type of renter you're hoping to attract. Are you looking for families? Are you looking for young professionals? Each of these demographics comes with different desires when choosing where to live.
Rental Valuation in Cypress, TX
Do you own real estate in Cypress, TX? A property management company can assist you with your rental valuation.
PMI Values Your Casa, property management in Cypress, TX, can help you in your search for good opportunities to ensure good returns on your investment.
Reach out to us through our website or by calling 832.305.5611 to set up a consultation. We'd love to earn your business.
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