Finding a bargain investment house for your next fix and flip project is only half of the process of house investment. The other half of this real estate investing strategy is going down to the house to examine the real estate investment physically for defects either in terms of the construction and legal title and other liens that can be on the house. You do not want to spend lots of legal costs later to undo the bad lemon you bought into.
This article will highlight five possible things to consider when searching for your next real estate investment.
Hidden Electrical and Plumbing Issues
Unless you find a house that is really run down and you want to tear it down to its foundations, you want to look out for properties that might have potential electrical and water piping problems. The reason why this is critical is that, wiring and water piping is usually hidden behind walls and other furniture fixtures and repairing them can be a very costly affair since you have to hack into the walls and run the piping and wiring if the problem is very serious. If you are new to fix and flip property investing try to bring a electrical engineer along with you when you are doing some property inspection.
Foundation Problems
Foundation problems are usually harder to spot. When walking around the house, look for cracks appearing at the side of the house and the foundation that goes into the ground. Look for large unusual holes found at the side of the house and cracks on the exterior paint of the building. You might want to bring a civil engineer and a contractor along to figure out how much it would cost to fix the house if you suspect the repairs involved will be substantial. You can also bring them along to give a “grim estimate” to the house owner and bring down the cost of the property.
Roofing Concerns
Roofing problems can be a persistent nightmare to you and your potential tenant if you are purchasing the real estate for tenancy purposes. When inspecting the house, look around the ceiling near the windows and around the edges of the walls to look for new paint or yellow spots or cracks with water in them. Most sellers would be smart enough to eliminate the water bubbles after a heavy rain when trying to sell the house, but it is always important to figure out if there is a major leaking roof which might cost you are lot into repairing it. Use this defect to negotiate the price of the house further if you are interested in the property.
Legal Complications
To begin with, Houston has many laws and regulations for real estate that you should get familiar with. One reason why the investment house in question might be a bargain could be because there are legal problems associated with it. Common ones include, multiple owners that cannot agree whether to sell or not. Litigation here would be futile and you should avoid such property once you learn about it. Another problem might be a lack of clean title. Did you know that the seller can be selling you only the building without the land or maybe there are existing tax liens on your house or some other liens that can prevent you from getting good title to the house? Spending some time chatting with a reliable real estate attorney to learn about common real estate problems in your area can save you lots of legal problems later.
Seller Bankruptcy
Bankruptcy of your seller or one of the part owners of your real estate may depending on the legal proceedings of your state affect your ability to transfer title quickly. Most states make it a requirement that the receiver of the bankrupt has to agree so pay careful attention to the bankruptcy legislation of your state. That being said, sometimes the banks are willing to sell you at a bargain so as to recover the bad debts quickly so do your homework before purchasing such an investment house
Final Word
In conclusion, these five pointers can be used as a starting point for you to evaluate your house investment. Spend some time to think rationally about the houses that you have seen and see if they have any of the above flaws and consider if you want to continue purchasing them and whether the costs that you may incur in fixing them will justify the discount of the house to the market value. Above all, take massive action today and pursue your fix and flip investment dreams.
