February 21, 2011
10 Hints on When to Buy A Home
By Sydney Potter Interest rates remain at historical lows and new housing stock is priced at its lowest in the past nine years, Here are 11 indicators that provide guidelines as to when it's time to buy an investment home in a new tract development. 1. Look for high appreciation markets.  Your market data research will make this very evident. The highest "Top 10" or "Top 25" appreciating markets in the country will on average change every four to five months. Search the Web for these "top market" lists. 2. Pick the early build-out phases of a development.  For example, try to buy in phase 1, phase 2, or phase 3 versus the later phases. The earlier phases, for obvious reasons are usually priced slightly lower to generate activity. 3. Target specific homes.   Watch for homes or lots that have a long build-out at a development, since this likely ensures a better chance of the home "marinating" in appreciation. 4. Target low deposit requirement communities.  Low deposit generally implies a deposit between $3,000 and $8,000, although you may see some deposits lower than that. 5. Know the Ideal Range.  The ideal price range for flip candidates is in the $200,000 to $400,000 range. These are entry-level to mid-market homes that offer sizeable returns in terms of the actual net profit on a flip, which should be in the $30,000 to $60,000 range. 6. In-fill areas are okay.  In-fill areas are normally inner-city, substandard, or community redevelopment areas located within a market area that might be qualitatively defined as C locations, as opposed to A or B locations, which are the better and higher priced areas of a city or suburbia. 7. Some people like dirt!  By that, it's not meant to be an insult, but this adage will make you money. Hence, it's okay if the development is in a C location, since this may offer some upside. 8. Understand demographic trends.  Why are people buying in this area? Just like in criterion 8, put yourself in the mind-set of the homebuyers. 9. Conduct a market grid analysis.  This will help you better understand your market. Ask yourself where the market is priced and more importantly and at what price it is closing. 10. Determine the fundamentals of your market.  Go out there and kick the dirt. Alternatively, do a satellite Web site search and survey the area from the comfort of your own recliner. Sydney Potter has worked in the real estate and mortgage industry since 1992 and is a licensed member of the National Association of Realtors and the National Association of Home Builders.  Mr. Potter has a BA in Political Science, two MBA's and part of a doctorate degree from Pepperdine. Most recently he served on the Board of Directors for two major HOA's in Las Vegas.  Permission granted for use on DrLaura.com

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