To make good investment decisions, you need to have a good understanding of the market you are thinking of investing in. So, the answer to the question, how many properties should I look at before I buy one? Is that you need to see enough properties so that you can gain a good understanding of the market.
Now, that may sound crazy because you don’t know how many properties you need to see before you understand the market. However, on your property investing journey, you’ll reach a certain point, after looking at a number of properties, where you start to predict what you’re going to see and you start to be very comfortable and if someone was to ask you, ‘Hey, that property, that street, how much is it worth?’ You know the answer.
Do the numbers
That’s the level of understanding you need to be at as an investor to find good deals. How many properties do you need to see that get to that level? Well, not that many because what I’ve discovered is that by doing some research, crunching the numbers and building an Excel spreadsheet, you can analyze all the properties that you come across and this method is a close second to actually seeing the properties.
If I have to go and look at 100 properties to understand the market and I’m working during the week, that gives me maybe a few hours in the weekend with which I can see maybe three or four properties a day, if I need to see 100? That’s one year of my time gone just researching the market.
Research is key
You can find the details you need for your research either online or through the agents and then you can build your Excel spreadsheet. That’s going to give you a very good idea about the market place, good enough for you to predict that house, in that location, that many bedrooms, is going to be roughly this price so your confidence level is going to go up. Once I have populated my spreadsheet, I then focus on whittling down my list to find the exceptional deals and then going to look at those properties I have assessed as being worth seeing.
So, when I am physically looking at a property, I already know it’s a good deal because my analysis had told me it is. This system really optimized my time and gave me a lot of benefit in finding good deals quickly. My ratio of properties I physically saw to bought was about 10 to 1.
You don’t need to spend a lot of time looking at property, but you do need to spend the time researching property. Initially, parts of researching a market do involve physically going out and looking at the locations because that’s the only way you’re really going to know. But when it comes to looking at properties, you don’t need to look at that many, use Excel to build a database where you can get the information that’s going to help you make those time saving decisions.
So, 10 is to 1 is about what I would recommend you do.