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How to Analyze a Property Deal in Less Than Five Minutes

Have you thought of buying a property but don’t know HOW or WHEN? What is the best time to buy? Will there be any value appreciation and how much should you offer for the deal? The truth is, there are loads of ways in which to analyze a property. Read on to find out more!

Does software help?

Nowadays, there is a lot of software that will help you do this in just a few minutes. It helps you calculate your internal rate of return every year from present until the end of your loan tenure. There are other ways such as buying a spreadsheet that will work for you or you can now even design your own. You can even simply analyze your deal with a calculator and pen! The point is, using good software or other methods will not do you any good if you don’t know how much margin you need to leave or the cost of repairs, etc. For any software, calculator or spreadsheet, you need to put in the numbers, and if you are not sure of the numbers, you cannot analyze your deal.

The KISS factor - Keep it simple stupid!

If you want to analyze a property deal in less than five minutes, you need to go by a few rules of the thumb. All you need to do is ask your realtor a few questions and seal the deal before both of you even get off the phone! The first rule you need to keep in mind is that any deal that requires a calculator, is not a deal at all. You should be able to judge by looking at a property, the repair costs, the value, and how much the person is asking for the deal. The main thing is that the property should give you value, and the details should be easy enough to evaluate in your head. If you need a calculator to find out how close the profit is to the deal, then it is time you move on to the next property.
Points to Ponder

As mentioned before, you need to know only a few things before closing the deal. The most important thing you need to know is after repaired value, the amount of repairs required, the closing cost and the profit margin. And if the property is on rent, you need to know the amount of rent. The next question is - how much should you pay? Well, you generally don’t need to pay more than 70% of the repaired value cost and this will always include the purchase price, the repair and closing cost. It is important to keep a margin of 30% to ensure that you can still have 30% equity after all overhead costs have been taken care of. If you are looking at an “instant landlord” property, you can pay a little more than 70%. However, never pay more than 80% of the repaired value.

Using a few good questions, the right tactics and simple rules of the thumb, you can seal any property deal in less than five minutes. No more long conversations or multiple meetings! Just quick analysis and determination!

Mindy Yong
mindy@mindyyong.com
Tel: (+65) 91002985
Fax: (+65) 64021826

CEA Registration Number : R021232Z

 

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