Personal Finance and Investment

Finding an on-paper deal for an investment property is only a part of the property investment process. The other part of the investing boils down to physical examination of the property for defects either with regard to the construction, or legal title and various liens that may exist on the property. You do not want to pay lots of legal fees in the future to undo the things you bought into. The present article will review five possible aspects to bear in mind when looking to invest into your next property.

First of all, unless you find a property that is heavily worn out and you are eager to tear it down to the foundations, you better watch out for houses that may have potential water pipes or electrical problems. The reason for this being critical is that, water pipes and wiring are generally concealed behind walls and various furniture fittings, and fixing them could be a highly expensive business as you have to get inside the walls and put in the piping and wiring if the problem is really severe. If you are a newbie in property investing, invite an electrical engineer to come with you for the property survey.

Secondly, one of the hardest things to spot are usually foundation problems. While walking around the house, look out for cracks that may appear at the side of the property and the foundation, which goes into the ground. Search for unusually big holes that may be found at the side of the house and cracks on the outside painting of the building. It’s a good idea to bring a contractor and civil engineer with you to estimate how expensive it would be to repair the property if you suspect the fixing required will be significant. You can also bring them with you to show a “harsh estimate” to the property owner and probably persuade him to reduce the price of the property.

Thirdly, poor roofing can be a serious problem to yourself and potential tenants if you intend to let the purchased real estate. When inspecting the building, take a closer look at the ceiling near the windows and along the edges of the walls to search for fresh paint, yellow spots or cracks with moisture inside. Most house owners would try to get rid of the water bubbles after a driving rain when putting the property up for sale, but it is always vital to find out if there is a major leakage in the roofing that may cost you a lot to mend it. Point out those defects to negotiate the cost of the house further if you are really interested in buying the property.

Fourthly, yet another reason for an investment property being sold at a bargain price may be because it has some legal issues associated with it. Typical problems include multiple owners, which cannot reach an agreement on whether to sell the property or not. Lawsuit here would be fruitless and you should avoid such kind of property as soon as you find this out.

Absence of clean title might be another problem when buying a house. Did you know that the owner could be selling you just the building without the underlying land or there maybe existing tax liens on the property or other liens that will not allow you to get good title for the property? Spending some time to talk to a reputable real estate solicitor to find out about typical real estate problems in the local area can indeed save you a lot of legal problems afterward.

Fifthly, insolvency of the property owner or one of the part owners of the real estate in question might, depending on your state legal proceedings, impinge on your ability to transfer the title promptly. Most states require that the receiver of the bankrupt must agree to pay close attention to the bankruptcy legislation of that state. Having said that, occasionally the banks are interested in selling you at a bargain in order to recover the unpaid debts as quickly as possible; so investigate the issue before buying such an investment property.

In summary, there are five pointers that can be used as a quick start guide to evaluate the property for investment. Spend enough time to rationally analyze the houses you have seen and recall if some of them have any of the aforementioned flaws. If they do, consider whether you want to proceed with the purchase and whether the money you may have to spend for fixing them will justify their reduced price compared to other properties on the market. Most importantly, start acting today and pursue your dreams of profitable investment into real estate!