Maximizing the return on your investment in a property can be a complicated process. Asking the right questions about a property you’re considering is an excellent way to determine whether it’s a good investment, but digging into hard fix-and-flip data can also be a worthwhile pursuit.
Here are three data sources you should consider before you purchase your next investment property.
1 – Foreclosure Reports
Foreclosure data in your target real estate market can reveal much about its strength and the likelihood that a particular property will turn a profit. A sudden jump in foreclosures could mean that your area is experiencing some economic hardship, and investing could be less likely to produce a good return.
However, it’s also worth noting that foreclosure reports don’t always accurately depict the current market. It can take months for a foreclosure trend to become evident in the data you’re reviewing. Such a slow-moving process can make it difficult to accurately assess whether or not a trend will affect your investments.
2 - Population Movement, Average Days on Market and Inventory Levels
The number of potential buyers in a given real estate market has a significant effect on how property in that market moves. In short, more buyers means more potential for moving a property quickly, which in turn brings you a faster return on your investment.
Understanding how population levels in your target market are moving, therefore, can help you accurately gauge the strength of a market. A growing population means more house-hungry buyers who could be ready to make a purchase. A declining population, meanwhile, often signals a cooling market.
Checking the average days a property is on the market and the market’s home inventory levels can also help you understand the market’s strength or weakness. A shorter time on the market typically means a strong pool of buyers who may be willing to compete for available homes. Likewise, a limited amount of inventory on the market can have a positive effect on prices through the simple effect of supply and demand.
3 - Crime Rates and School Districts
Finally, crime statistics and school district quality are both good indicators of how a market will be perceived. Take note of what crimes, if any, are committed in the market while paying attention to the quality of the nearby school districts. Buyers are willing to pay more money for properties located in good school districts.
