Originally Posted By John Dessauer On June 5, 2016
It is a very rare property that doesn’t have some undesirable aspect that mars its perfection. When you are a real estate investor, it is your responsibility to ferret out these not so good features and determine if the property’s ultimate selling price will be impacted by the flaws.
Even when a property condition disclosure form is used the seller may not disclose every single flaw of the property. Also, savvy real estate agents discourage the seller’s presence during a showing of the property and one of the reasons is so the seller won’t be questioned by the potential buyer. Too much information can sometimes kill a lucrative real estate deal.
When touring a property for sale there is usually not enough time for the property investor to investigate every single thing, especially when you need to make a snap decision about the purchase because of stiff competition. So what can a property investor do to protect their business? There are several questions you can ask that will reveal a wealth of vital information about a potential property investment.
Find out what amount the present owner originally paid on the property. How much equity has accumulated? If there is a reasonable amount of equity, the owner can afford to lower the price.
If you are using a real estate agent, ask the reason the owner is selling the property. Find out if there is any sort of major stress in their life, such as a divorce, illness, or job loss. Any major stress of this sort could indicate an increased motivation to sell, hence, the investor may obtain the property for a lower price.
Be sure to ask about gangs or any recent crimes in the surrounding neighborhood. Did the crimes involve house break-ins or invasions? Did a murder occur in the house or neighboring homes? A house in a neighborhood of burglars or other criminals that target homes is not a smart place to invest. Talking with the neighbors can be a good way to get information about the area.
Is the neighborhood a noisy one? Do darks bark all the time, the neighbors play loud music, or have loud car alarms that go off at all hours? Do cars race up and down the street? These are all huge turn-offs when it comes to reselling or renting an investment property, especially if the house is a family-style dwelling.
How well has the property been maintained? If a home is involved in the sale, or a duplex or apartment building, be sure and inquire about all mechanical systems, such as the condition of the HVAC, furnace, and hot water heater. Anything over seven to ten years may need replacing, depending on the condition of the system. The condition of the roof should also be taken into account. Since a roof is virtually out of sight and not easily accessible, the condition of the shingles and flashing is easy to overlook. Before investing in a property be sure and ascertain the condition of these important systems. Any one of these items will be expensive to replace and will take money from the investor’s overall profit.
“Remember, wealth has nothing to do with money, success has everything to do with failure, and life is as simple as you make it!” – John Dessauer