When choosing residential investment property, location is on top of the list of
importance. As a rule of thumb, when the price of the property equals
approximately seven times yearly rental, it is considered a good buy. When the price
equals eight to nine times the yearly rental, it is considered a fair buy. Fair market
price is also determined by the year the property was built, the condition of the property
and the lot size.
advisable that such a purchase be made through a Realtor. When doing so, you can ask your
Realtor to show you all the properties for sale in that sub division and more importantly,
all the comparable sales in that area for the last year.
It is highly inadvisable to purchase any income properties in a bad, run-down,
crime-ridden area, even at a purchase price of six, or even five times the yearly rental
It is advisable to
acquire income properties in a good, newer area at market (or below market, if available)
price for best property appreciation, and to avoid the many problems that accompany owning
and managing income properties in a poor, run-down, old, crime ridden area. LVN