Wednesday, April 2, 2008

Learning: Day 7: What's Behind Door 1?

Now you are ready to begin looking at prospective properties with your realtor. Hopefully, you have chosen a realtor who is also an investor, otherwise they can't really steer you in the right direction.
When looking at prospective properties, here are some tips to keep in mind:

1. If you are searching in a market where snow is possible, don't bid until snow melt. You want to be able to see the roof, the foundation and the basement after melt off. You also want your inspector to be able to do a full inspection, and he can't do that with snow covered yards, and roofs.

2. When looking inside, check the kitchen well for roaches and under the sink for rat droppings. These pests are harder to get rid of than you realize. You can bomb the aprtment, but if eggs are in the tenants belongings, more can survive.

3. Check to see who is home if your visit is in the middle of the day. Are there more adults than bedrooms? Should these adults be at "work" at that particular time of day? No work, no rent:)

4. Look at ceilings for leaks, basements for water or water stains, and under sinks the for drips.

5. Count the meters to be sure the electric utilities are separate. An even better gauge is to count and check the condition of the electrical panels in the basement.
You don't want to paying for house utilities...trust me!

6. Next be sure we have separate and functioning water heaters. Plumbing can be expensive. The same goes for the age and condition of furnaces. Don't inherit someone's 50 year old ancient furnace.

7. Steps and sidewalks. They are an investor's nightmare. Any cracks or damage should be corrected before you inherit the property, We don't need a lawsuit 5 minutes after we close.

8. If tenants are home, verify the rent you see listed on the listing. Rents are often inflated. One question and the tenants start giving more information than you really wanted. It's a great look into to real situation.

9. Walk the property. Be sure you don't have animals or garbage in the backyard. That is a problem waiting to happen. It's also good to be sure outdoor lighting covers front and back entrances. Another possible liabilty.

10. Lastly and most obvious, be sure to get a well-known inspector. I recommend psoting for requests in local yahoo chat group run by investors, or checking out the local investors association. Don't let your realtor set up the inspection unless they are sesoned investors themselves. That inspection should be video taped and completed in a timely manner. Do not sign a contract without an inspection contingency.

These step can be fun, but it is vital. Do it right. Take your time.

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