When you buy your first home or investment property, much of your focus comes down to money – the mortgage, the interest, the down payment, and who is going to pay for what.
However, you can’t lose sight of what you are doing when you are buying real property – you are buying things – roofs, walls, pipes, stoves, switches – that can have hidden problems that are costly to fix.
Here are a few easy steps you can take to protect your big investment and your wallet. Don’t let real estate agents rush you through this process. Remember, if you find certain things wrong with your prospective purchase, you might be able to negotiate the purchase price downward. This will put money in your pocket (which you’ll need when you have to make these repairs). Take a deep breath and get to work, since most real estate contracts give you around 17-days to do all of this. Get going!
FOR ALL PROPERTIES
1. Review all of the forms that constitute the purchase offer and agreement very carefully BEFORE you sign. Don’t just trust your real estate agent that everything is fine.
2. Review a copy of the preliminary title report. This will tell you about any hidden property interests.
3. Review the Multiple Listing Service listings and other ads for the property and confirm that what the ads say are true, such as
lot size and square footage and amenities.
4. Get all important systems checked out by licensed professionals (plumbing, A/C and heating, electrical, roofing etc.).
5. Any pending or anticipated lawsuits and insurance claims.
6. Talk to neighbors, current tenants, and vendors. They will often provide you candid information about the property and the
neighborhoodthat sellers and their agents will curiously not discuss.
7. Talk to an insurance agent and get insurance.
ADDITIONAL STEPS FOR INVESTMENT PROPERTIES
1. Review all existing rental agreements with tenants and any recent letters or notices to tenants. If no written agreements exist,
this could be a cause of early landlord-tenant headaches.
2. Get accurate records of rents and security deposits paid.
3. Get copies of a year’s worth of utility and maintenance bills. This will help you calculate your operating expenses and any
sharp spikes in utility bills might signal that something is not working right.
4. Review zoning records.
5. Review all permits, codes and regulations (occupancy, parking, etc.) to make sure the building is in compliance or, if not, what it will take to become compliant.
This is by no means an exhaustive list of steps. Nevertheless, this is a smart way for you to approach your next real estate purchase.
Call Montez Law to help you figure out what you need to look at when looking for and purchasing a property. But, don’t worry. If you did not take any of these steps and a problem has arisen since your escrow closed, call Montez Law right away.