Ways to Understand Real estate market

If you’re new to the world of property investing, one of the biggest mistakes you can make is underestimating the Importance of a real estate market analysis. Unfortunately, this is an error many inexperienced investors make when they first start. If your ultimate goal is to make extra passive income through real estate investment, finding out the state of the market where you hope to invest is vital to your potential success. A good market analysis will keep you from spending too much to acquire a rental property or setting the price of your property for sale too high, two fatal mistakes that can cut into your profits and even cause a loss in extreme cases. 

If you’ve ever wondered “what is a real estate market analysis?”, read on to learn more about how this valuable tool can help you get ahead in real estate investing. 

What is a real estate market analysis?

A real estate market analysis is often called a comparative analysis of the market by people in the industry. This analysis helps you understand the current market in the areas where you might want to buy a property. You can also use a real estate market analysis to help set a price for a property you own that you want to sell. A real estate market analysis ensures that the value you assign to a property is fair and in line with the market value of other local properties. 

To begin the real estate market analysis, look at the property you own or may want to buy and try to determine a good price for the property. Look at important factors like square footage, the year the home was built, how recently it was updated or remodeled, the kind of appliances in place and how old they are, and how many bedrooms and bathrooms there are in the home. Also, consider the listing price of the home when it was last sold and how much you have invested in upgrades to the property since that time. This should help you come up with a range of values for your property. 

Next, expand your analysis to include the value of comparable and recently sold homes in the area. This will help you ensure the price you set is not too high for the local area. You can find the information you need online by searching property records and even online real estate listing sites for property that was recently sold in the same zip code. To make this analysis accurate, try to look at homes that have the same amount of bathrooms and bedrooms as yours and around the same square footage. By focusing on homes around the same age and size as yours, you’ll have a more accurate idea of what the property you’re interested in is worth in the current market. 

Finally, you can use the price per square foot for local properties that have recently sold to calculate an average price for the home. To get to the price per square foot of a home, take the total sale price of a home and divide it by the total square footage of the home. Once you do this math for a few properties in the area, you should have a better idea of the average cost per square foot in the neighborhood. 

Now that you know the answer to the question “What is a real estate market analysis?”, you can use this tool to make your real estate investments more successful. If you want to learn more about how to generate more passive income through investing in real estate, consider taking a class where you can learn the basics from an expert. 

CDS Real Estate Investing offers an online course for new investors called How to create 100K+ in passive income through investing in real estate. In addition to going over the real estate market analysis and how to conduct it for a potential investment property, you’ll also learn other valuable aspects of the business, such as where to get financing to buy an investment property, making the best possible deal, setting yourself up legally as a business, and renting the property out to tenants.