My fellow steemites, the NEST idea that @fyrstikken and @picokernel brainstormed is gaining "steem." After speaking with Nate and @virtualgrowth on chat, wanted to provide some analysis to assist in his search.
Please Note - The property I am using in this analysis is one of many he plans to go look at. However, this research can be applied to any of them. Call it a quick tutorial, but this is the initial process I use when analyzing properties that I consider purchasing.
Much of this process has been described in my posts over the past year and can be found on my personal site scaredycatguide.com (yes, shameless plug..lol)
Property Analysis Example
385 Howery St. Christiansburg, VA
You can look at the listing for this home on zillow, realtor.com, etc.
Listing Price & Price History
385 Howery St. Christiansburg, VA
- Has been listed about a year
- Price has just been cut for a third time
What is important here though, is what the seller paid for the house - but how to we find that???
Property Appraiser Website
The beautiful thing about real estate is it's all public record. Just go to the County appraiser (property records) site and you have all the "inside" info you need.
@picokernel search is in Montgomery County
- Here is their website: http://realestate.montva.com/search/commonsearch.aspx?mode=owner
Took me a little while to navigate their site as it's very different than Palm Beach County, FL (I'm spoiled with UI of that site), but found everything we need.
Above we see the property in question:
- Owner bought in April 2014
- Owner paid $185,000
We always want to know what someone paid for a property, knowing if/how much they may be profiting or if they are taking a loss help in building our offer price.
For 385 Howery St- with the new price to 183K we have learned the seller has finally accepted they will take a loss on this property. They are truly ready to sell it and move on - which means we may be able to get it for the right price.
You never want to overpay - "Buy Right" is what I preach and teach in all my material.
Nearby Home Comps & Criteria
It's more important to see what similar homes have recently SOLD for - as opposed to what other current listings are. As we see people often list high and then have to cut as seen in our example.
Once again we will use the property records site to search nearby comparables.
Search Criteria Used
- 3 bedrooms
- 2 bathrooms
- Square ft. 1600-2000
- Sales Date (one year period)
- Tax District (to narrow down a reasonable sized radius)
- Price between 150k-200k (to remove outliers that aren't applicable to this props condition)
Here are the results:
We received 10 properties - I cycled through each one of them from latest sales date to oldest and pulled up some of them on realtor.com as many times the listing are still sitting up there and you can see pictures of the home to compare.
Based on all of them you get a good idea what you should pay for a home. I will zone in on one particular comp for an example of the thought process:
235 Ash Dr.
- Purchased for 172k in December
- Home is roughly 200 sq ft. larger (variance exists between the listings)
- Home was built 40 years earlier
- Home is completely outdated
Processing This Data Into Useable Info
With Ash St. being larger it should go for a higher price. However, since it's an older home that will go against it's value compared to newer construction. Also, the kitchen, etc. was completely outdated in the pics (that's why we hunt for those old listings) so that also brings down the value.
Basically with the offset of larger yet outdated against the 385 Howery St. home. I'd say the 170's makes for a reasonable price for this home.
Is that what we offer?
Uhm, no. If we want to land at say 175k then we need start much lower. What price is up to the person, what they are comfortable with and what their agent thinks has a chance in hell. I can tell you I would not pay more than 175K for this property and that's assuming it is turn-key (no update or maintenance $s on move-in)
Speaking of Agents (deal tip!)
Here is a key tip to get a better deal @picokernel. Go DIRECTLY TO THE LISTING AGENT. When you go directly to the seller's agent they do not have to split their commission and will often "cut" their commission by several thousands dollars to get the seller to accept since they will still be making more than with a split at a slightly higher sales price.
For 385 Howery St. the agent is
(Just gave this dude free advertising...lol)
You can find the listing agent towards the bottom of a home listing on realtor.com
So much more can be said, but save it for another time.
What I like
- Is that the homes in this area are new Virginia Tech, a major university. Thus, some additional income can be made by doing airBnB for visitors to the college throughout the year (this something Nate mentioned he may do)
- The fact that he is buying this as a home to live in and settle for a while. Meaning it will likely be held 10 or more years.
What I don't like
- The fact that the area appreciates very very slowly - him holding it for a long period is a remedy (as long as you don't buy in a bubble which is not an issue in that area). As long as the property is going to be held 10 years or more I would be comfortable with it.
That's all Folks
I may do an analysis on properties in the area being used as a rental in case you guys ever wanted to turn the NEST home into one. Just gotta see if that market supports the financials.
Disclaimer: All info in this post is my opinion and does not constitute advice.
Source data from Montgomery Property Records and Realtor.com