Investment Real Estate Market Research

The "adventure" of purchasing rental property should begin by performing some basic real estate market research for the type of property you'd like to buy.

Learning everything you can about the condition of your local real estate market will help greatly with making a wise and successful purchase. Knowledge is power, and doing your research beforehand will provide you with a good overall view of the existing rental property market.

To gain insight of market conditions in your area for rental properties, you'll have to conduct a CMA, or comparable market analysis . This will provide you with important information such as the asking and selling prices of properties that are similar to ones that you'll make offers on.

If the local real estate market is not particularly strong, large differences between asking prices and actual sales prices of properties may exist. This is why asking price data can provide a false indicator of the actual market.

As a buyer, your concern is only with the actual sales prices of comparable properties. This is because sales prices are the true "reality" of the market, or what buyers are actually paying. Realtors have access to sales price data and all other information that is provided in the multiple listing service, or MLS.

Another important market research indicator to observe is the number of days that properties stay on the market before being sold. Properties that stay on the market for long periods (or go unsold) do so for one simple reason - they're overpriced. The sellers of these properties are out of touch with the true realities of the market. On the other hand, properties that sell very quickly may be under priced.

So, market research will make you an informed buyer, and that will provide you with a stronger position from which to bargain from. With this knowledge you'll be much more likely to buy the right property at the right price.

For more in-depth information about real estate market research, please visit The Landlord's Library book collection. It's a terrific, one-stop source for practical, comprehensive information on the entire subject of residential landlording.

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