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A Word from JP Moses, Director of Awesome...
One of the most important aspects of being a real estate investor is knowing how to assess a deal -- how to analyze whether or not it's a good deal or a bad deal. Add of course, one of the key components of this process is reading comparables (comps) to determine the current values in a specific market.
But this isn't always as easy and intuitive as it sounds, is it? In fact, there are some rather noteworthy mistakes we see a lot of investors making when reading comps -- mistakes that ultimately lead to poor evaluation, which leads of course to stinky deals.
The following is Mogul faculty Steve Cook's take on some of the biggest mistakes he sees investors making when reading comps, and more importantly, how to avoid them.
From Steve Cook, Deal Getting Adviser...
{Mogul Elite: Download an MP3 and transcript of this video in the Power Pack Tools for this lesson.}
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Pull out a current deal file: One you're working on now or a recent one, along with the comps (if you don't have one right now, pull up another investor friend's file)
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Ask yourself: Are you taking the larger market into consideration?
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Broaden your perspective: Don’t focus only on exact match homes exclusively…this can lead to tunnel vision and only gives you part of the picture.
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Start: taking a more holistic view of the neighborhood you’re deal is in… not focusing only on one particular property/type.”
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Remember: to comp using properties that are comparable to what your home will become rather than what it is now.
Steve Cook
was a nationally recognized real estate investing educator, author and real estate investor, prior to teaching Lifeonaire life coaching system. Today he is regarded as "The Coaches' Coach." Many of the people who have been coached by Steve have become coaches themselves, eager to share what they have learned with others.