Top 7 TIPS FOR CHOOSING THE BEST PROPERTY MLS COMPS!
Before you start your real estate rehab it’s important to get a game plan on exactly what and how you will rehab your real estate investment property. Running MLS Comps, studying the sold and active comps, are critical steps in determining the rehab needed for your real estate investment. Proper planning prevents poor performance.
1.) Property Comparable should not cross any major streets or highways: When flipping a property it’s important not to use properties that sold in an area that is across a major highway simply because the number one factor in determining real estate value is location, location, location. A property across a major street is in a different location and might be in a better developed area, zoned to a better school district or even have easier access to the highway.
2.) Preferably located in the same subdivision
Be within .5 mile of subject property (rural properties are an exception) Subdivisions and better yet the subsection of the subdivision is an ideal boarder for a solid property comparable.
3.) Physically visit the sold comps and a few active properties in the area: Check the competition out. Being a successful passive real estate investor is truly an oxymoron, you got to get active. Touch the real estate property, visually look at it in detail, does your subject property have a more updated kitchen, is it on a better lot, does it have a more appealing layout? The key is to determine if and why a potential buyer would pay a premium for your property.
4.) Don’t neglect school zoning, (some subdivisions are zoned to more than one school, which may impact value) This is one that many real estate investors look past. That’s why subsections in a subdivision are critical. Many master planned communities will have several schools zoned in the subdivision. Most buyers that move out to the suburbs like to know their children will be going to a highly rated school.
5.) Compare apples to apples: Real estate investors tend to get in trouble when they begin to what we like to call “reaching for real estate comps” When the area allows for it, only include mls comps that feature the same number of bedrooms and bathrooms as your subject property. A good rule of thumb on square footage is to keep the mls comps within 10% of the subject property square footage.
6.) Utilize agents and brokers, real estate comps free: A real estate agent will gladly provide a real estate investor mls comps. But it is important that you ask your investor friendly agent to provide the full mls comps report, that includes the detailed listing of each property comp that was used in the comparative market analysis (cma)
7.) Utilize local Hard Money lenders and private money lenders: Hard money lenders like Tidal Loans have worked with many real estate investors and brokers. They have access to the MLS and the local hard money lenders have the expertise that is needed to understand the local market you are investing in. Tidal Loans can provide 100 financing hard money loans as well!