In January 2022, 6,020,000 houses were sold in the U.S., which is a decrease of 2.46% from January 2021. Real estate agent statistics show that as sales numbers have increased, house inventory numbers have not significantly increased.
Buying a house or a commercial building is one of the biggest decisions you will make in your life. If you are a real estate investor, the stakes are even higher because you are putting your money on the line.
Due diligence is the careful assessment of a potential investment before closing the deal. You should have a due diligence checklist ready once you have decided on your target property. Checklist items should be considered as you weigh the benefits against any possible red flags.
Here is a checklist to consider.
Employment and Population Growth
Population growth is one of the main indicators of a booming real estate market. As more people move into an area, the demand for housing and other services increases, driving up prices. Employment growth is another key indicator that when more people are working, they have more money to spend on housing.
To get a complete picture of a real estate market, investors need to look at both employment and population growth. By tracking these indicators, investors can be sure they’re making informed decisions about where to put their money.
Real Estate Value Trends
Real estate investors should conduct due diligence to research the current and past value trends of the area. By looking at the data, investors can get a better idea if the property is over or underpriced, as well as how quickly the value of the property may increase or decrease. Additionally, real estate investors should examine the surrounding neighborhood to see if any upcoming developments could potentially impact the value of the property.
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Availability of Facilities and Public Transportation
If the property is located in an area with good public transportation and a variety of amenities, it is likely to be more valuable than a property in a less accessible area. This is because potential tenants will be more interested in a property that is conveniently located. Therefore, it is important to consider the availability of facilities and public transportation when evaluating a real estate investment.
Due Diligence Checklist in Crime Rate
A high crime rate can make a neighborhood unsafe and unappealing, which can drive down property values. Before investing in real estate, do your research to find out the crime rate in the area you’re considering. You can check with the local police department or look up crime statistics online.
Maintenance and Repair Expenses
By being proactive and keeping up with suggested maintenance, you can avoid costly future repairs. As a real estate investor, you should perform regular due diligence checks to ensure that your property is in good condition. These checks should include an evaluation of the property’s condition, an assessment of any necessary repairs, and a review of your maintenance budget.
Be a Smart Real Estate Investor
A due diligence checklist is an important tool for any real estate investor. By ensuring that all key areas are investigated before making a purchase, investors can minimize their risk and maximize their chances for success. When used correctly, it can be a powerful tool for success.
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