If you want to invest in rental real estate in Baton Rouge, the first step is determining the value of the property you are interested in. In this blog post, we’ll share with you the 3 ways to value a rental property in Baton Rouge so you can know right away if the rental property will be a good investment.
When you’re looking at rental real estate, the asking price is just one way to value the property. This is usually the price the seller views the property is worth. However, your job as an investor is to apply some of these ways to value a rental property in Baton Rouge, compare it to the asking price, and figure out if their price reasonable.
3 Ways To Value A Rental Property In Baton Rouge
#1. Cash Flow Potential
One way to value a rental property in Baton Rouge is figuring out the potential income you’ll make every month from this rental property. Consider both gross and net so you can easily calculate whether you’ll be cash flow positive right away. If you aren’t familiar with how to figure out the potential cash flow of a property, here’s a more in-depth article from our website to help you get started on this analysis: 4 Costs Associated With Rental Property in Baton Rouge
Since you are considering investing in rental properties in Baton Rouge, getting familiar with the costs associated with owning a rental property in Baton Rouge would be a good start as well so you can get a better idea whether the property will be cash flow positive or negative.
Have you seen our list of cash flowing rental properties? Click here and fill out the form to check them out.
#2. After Repair Value
When working with a distressed seller, you’ll want to be familiar with what the house will be worth after you fix it up. This is what we call the After Repair Value. Here is an example of what this looks like and some useful formulas:
Seller is asking $75,000 for the property. After assessing the house, you are seeing it will need $25,000 worth of repairs. This brings your expenses to $95,000. Before buying this house, you will need to do some research on how much the properties in the area with similar square footage, bedrooms, bathrooms, and renovations are going for. If the similar, renovated houses are only going for $100,000 then that means you will only make $5,000 off the house. But, if the houses similar to yours after repairs are selling for $155,000 then this property has the potential to be a great deal.
#3. Value To Tenant
There are decent and good deals to be found in the Baton Rouge area. Some of them may be really tempting to buy but an aspect some investors overlook when buying rental properties is if the potential tenant will want to live there. You’ll want to look at the convenience of the area. Is there a grocery store nearby? Is there local fast food or restaurants the tenant can potentially get a quick meal at? Is there a nice park nearby? Although these may not be dealbreakers when it comes to your investment, they should be taken into consideration.
Summary
Investing in real estate is such a worthwhile and exciting journey, but we understand if some of it can be confusing or if you have more questions. We are definitely here to help in any way. You can also reach out to us and we can do the calculations and estimates for you. We even have rental properties with a lot of these numbers crunches already and many of them are cleaned up, fixed up, and ready to rent (some are even rented).
It’s a great time to invest in the Baton Rouge area, and we can help make your real estate investing fast and easy.