Regardless if you are buying from an auction, a bank or a traditional seller, you need to know exactly what you are getting into. There is nothing that will sink your business quicker than buying what you think is a home run property and it turns out to be a lemon. You need to know everything about the interior of the property, the neighborhood, past sales and the property lines. All it takes is one oversight or omission to get stuck with a property that will engulf most of your time and money. Thus, you need to know exactly what you are getting into when you purchase a property. Having all of the facts prior to closing will mitigate risk and increase potential profits.
Most purchases have some element of time consideration involved. Since this is the case, you need to be able to quickly evaluate a property without missing any important elements. It is helpful and important to have a system in place that you can use as a checklist for every property. You can start with offsite items such as tax and land records and work from there. Whatever system you use, you need to be as diligent as possible. There is no guarantee that you will be perfect even if you spend days with your research, but you need to give yourself the best possible chance at success.
If you are buying a condo, you need to know exactly what the amenities are. If you are buying a multifamily property, you need to know where you can park and everything about the mechanicals. If you are buying a property on acres of land, you should know where your property line ends and your neighbor’s starts. These are all fairly basic items, but they are often overlooked. You may be in such a rush to get an offer in that you neglect the fact that your offer may be accepted and you may end up getting stuck with a property you don’t really want.
Items on title, taxes, insurance and zoning irregularities are all potential problems that can pop up just before or even after you take ownership of the property. Imagine buying a property with an easement to your neighbor’s yard or starting to expand on land that is not yours. These may happen on one out of every 100 properties that you own or even that you hear about, but it is this one that could stall your business plans. If your money is tied up in one property for months, it will prohibit you from looking at other properties and you may end up missing out on golden opportunities.
Most of the time, all it takes is slowing down and following your checklist. We are in such a rush to get everything done and move on to the next task that we overlook and short change the ones we are working on now. Buying a property, especially as an investment, requires you to have a plan and be able to get in and get out as quickly as possible. Having to deal with unexpected issues is not part of the plan and can make the real estate business a nightmare. Slow down and know everything about the property you are buying.