Monday, November 07, 2005

Determining a good investment property

If you should decide to get into real estate investing or are making plans to and you want a good way to measure if a property is overpriced, look at the price per square foot ratio. Simply stated:

Asking Price/Square Foot = Price per square foot.
$480,000/1200 sq ft = $400 per square foot.

Dont just make offers on real estate based on asking prices or what an agent tells you. Analyze competing and recently sold real estate and get an average of the price per square foot. Knowing this simple formula will often times help you tremendously in knowing if something is overpriced or not. In Los Angeles it is amazing how regular people and agents price their properties and the prices people are paying for real estate. I will not predict a bull or bear market in real estate, I will just say, ask yourself, is the ability to live in Los Angeles versus another area of the country really worth paying more than twice as much for half the home? Only you can answer that question