Do you want to spend a lot of money later after buying into a property investment that poses a lot of troubles? I bet you don't want to walk through that path of pain and regret. And since you're here, reading through this article, you have my permission to count yourself lucky. This piece is set to emphasize on five possible traps to avoid when searching for your next investment property.
You must have already been aware that there are two sides to the process of finding a bargain for real estate investing. Apart from the first half of paperwork, the other half is the physical inspection of the property for any form of legal ownership, construction faults, or some other legal claims.
These five pointers below can be used as the starting point as you set out to evaluate your property investment.
- You must know that it is highly important to have a professional electrical engineer with you when you are doing your property inspection. This is critical because buying a property that has serious wiring and piping problem can be very costly. In some serious cases, you might have to slash into the walls to run the wiring and piping. For your information, wiring and water piping are normally hidden behind walls and furniture fixtures and this is an additional cost for you after you might have bought the property. But unless your plan is to run down the property to its foundations after buying into it, you might forego this simple, yet critical consideration.
- During the course of an inspection, it is also essential to look out for holes or cracks appearing at the side of the house. This is typically a foundation problem which is harder to spot. Unusually large holes by the side of the property or cracks on the exterior part of the building must be well checked. You might consider having a contractor or civil engineer for their professional perspective on how much the property is worth to the property owner. If these repairs on the property are abundant, you might actually want to have them with you to know exactly how much it will cost you to fix the property.
- Another important part of the property that you need to properly inspect is the roofing. Surprisingly, this can be an enduring nightmare for you or your prospective tenants in case you're buying the property for tenancy use. Look carefully around the ceiling close to the windows or the edges of the walls for yellow spots, new paints or cracks with water in them. You need to avoid some smart sellers who wipe out the water bubbles after a downpour when trying to sell the property. On the other hand, figure out the possibility of any major leaking roof that will eventually cost you a lot into repairing it. Key into that to negotiate the price of the property further in case you have an interest in the property.
- Legal problems connected with the property are another critical point you must take extra care to look into when searching for real estate investing. Common legal problems can include multiple owners with indecision as to whether sell the property or not. The court case will be a waste of your time and money and you should steer clear of such property once you're aware of it. And what about the clean title problem? What if the seller is selling you only the building? What about some other liens that can thwart you from getting a good title to the property? Learning enough from a reliable real estate attorney about common real estate problems in your area is your best bet for saving you lots of legal problems later.
- Lastly, a careful attention on the issues concerning the bankruptcy of the property seller or one of the owners of the real estate might affect title transference. In most states, it is required that the receiver of the bankruptcy agrees to consider paying careful attention to bankruptcy legislation of that state. Make it a point of importance to do a careful check before you purchase such an investment property. In some cases, banks will be willing to make a sale to you at a bargain in order to recover the bad debts quickly. The bottom line is your diligent research before moving on to make a purchase.
Finally, spending time to consider if the property you are about to purchase has any of the flaws mentioned above will save you from falling into some pitfalls that will cost you a lot of money. It is also important to consider whether you want to go ahead and make the purchase and in this case, it is wise to justify if the cost you will incur to fix these flaws will be profitable enough with the market value. As you pursue your property investment dreams, make sure you take massive action from falling into these traps.