You don’t have to be a real estate agent to think like one. My family has been investing in property for years and in that time period I have learned a few tricks of the trade that no one should overlook. There are many things that you have to look at when purchasing a property, whether it is to live in or as an investment or rental income, but there are a few that you should always put at the top of your list. These 5 things are sure to help you out in the long run, and keep you from making a big mistake in the real estate market.
1- Check the history. Finding out about the history of a property can help you out greatly. A lot of people may not think this is relevant and wonder why knowing who’s owned the property is going to make a difference, but it also allows you to find out if there has ever been a fire, natural disaster, tree fall, or other incident that could have damaged the foundation in any way. You also want to pay attention and notice if the property has been bought and sold a lot. This will clue you in to the fact that something might be wrong. Talk to neighbors, talk to the past owners, get the information so that you know what to expect when you or your renters move into the property.
2- Inspect, inspect, inspect. This can go hand in hand with number one. You need to inspect every piece of the property, even if you are paying well below market value on it; you still need to make sure everything is looked at. If you are going to wind up having to pay $10,000 in renovations and fix-ups, when you are only paying $8,000 below the market value, then you need to rethink that step. If there is anything that is damaging to the property and has already been done, for instance bad pipes, bad septic tank, cracked foundation, termites, or water damage, then you need to push for the sellers to fix the damage before you take possession of the property.
3- Look into the future with the value. If you think a property is going to loose value, then you might want to look at a different one. If there is a part of town where property value is low, and there is the chance that your property may wind up becoming part of that side of town, then you could be loosing money. You need to buy property that is going to gain value. Most land continues to gain value as time goes on, and if you buy property that has at least some acreage, even if it’s just one acre, then you know that land value will eventually start to climb again.
4- Current zones, verses future zoning possibilities with location. Some people like to buy property that they think will eventually turn into a commercial zone. This might be a good thing if you are solely looking to earn money off of an investment, as commercial property is almost always worth more, however if you are purchasing the property to raise a family, then it might not be a good ideal to buy property that could switch zones in the future.
5- Potential to build on if needed. Let’s face it, things change. People have kids, they have older parents they need to help out, they need to take in renters, and the possibilities are endless. It is always a good idea to make sure that you have the potential to add to the structure if it is ever needed. In doing this you need to make sure that the property is available to be added to, and has no standing stop work papers on it. These are usually obtained if a previous owner began a build on or remodel without first obtaining the proper paperwork or because they failed an inspection and these can sometimes hang over to the new ownership. Make sure the property has a clean history, and find this out before you purchase it, so that if there is an inspection needed or a fine to be paid, that the sellers take care of that first.
There are many more things that go into purchasing property, however if you start with these 5, the rest should fall into place.