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Tips to Identify A Good Real Estate Investment Property

Driving along the road you suddenly noticed a shabby house in the midst of an unkempt lawn. The house needs a patch of new colors. You need to straighten out the shutters and trim the lawn. But you understood a little work can make it a gem of a house and Ah! There’s also a “For Sale by Owner” sign. You think the house is just perfect for you, but how can you be so sure?

Before you buy a house, there’re several things that should be considered. Firstly, why are you buying that house? There are quite a few possibilities. Are you thinking to flip – buy at a low cost, furnish it and then sell it at a handsome profit? Do you plan to buy it as rental or you are looking for a house of your own? Whatever your intentions are, you need to know few common things before you buy a property.

Check the Price of the House: Is the house a FSBO (For Sale by Owner) or is it listed with a Realtor? How practical is the price? Can you arrange for a low or no-money-down financing? Is the owner ready to negotiate? In case you are thinking to flip, calculate your profit after doing the repairs.

Check the Neighborhood: Take a look at the neighborhood of the property. There is an old saying that there are three important factors when it comes to real estate: “location”, “location” and “location”. No matter how wonderful is your house, it will be difficult for you to live or sell it if the neighborhood is not good. But that of course, doesn’t mean that you will not buy that property-you can buy it depending on how low a price you can bargain. If you think you can make profit at that price, you can buy it. Also check the amenities. How far are the amenities? Try to check the price of a similar kind of a house in that locality. Check the price of the house accordingly.

Check the Condition of the House: Check whether the property you want to buy requires any extensive and expensive repair work. The house should have a sound structure with no major plumbing or electrical problem. You can manage refurnishing it, painting it or little landscaping, but if it needs extensive repair work, then it will cut your profit. If you find no problem with the structure at one glance, then look for the problem areas:

• Check the separation areas between walls and floors, mainly outer walls.
• Check the ceilings and the walls. Moisture on the walls and ceilings means a plumbing problem.
• If there are suspended ceilings, lift the tiles and check for moisture marks or loose plaster. Any of these indicate plumbing problem.
• Check the wooden furniture in the house. Piles of sawdust at the corner of woodenware mean termites.

Check the Title of the House: This is the final test. Make sure that the house has clear title, with no attachments or liens to sour the taste. If you find that there are and you still want the house, go for a conditional sale. In such sales, your purchase is conditional on the liens being satisfied.

If the house passes through all the above checks, congratulate yourself, you’re lucky to get the house you like.