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Real Estate Investment Deal Breakers

Published on Thursday - February 20, 2014

There is a lot that goes into finding a good real estate investment. You can have the right property in the right area, but if there are issues that you have red flagged, it may not be the right fit for you. Some of these issues can be easy fixes, but others can be costly and become bigger headaches down the road. You always want to be flexible with your property guidelines, but at some point you have to know where to draw the line and move on. If you get started with a property you aren’t fully comfortable with, it can lead to months of headaches and regrets. Thus, familiarize yourself with potential real estate investment deal breakers.

Your own personal deal breakers can be anything from the number of bedrooms to the style of roof to the amount of work needed on a property. Your personal experiences will give you a list of things that you just don’t want to get involved in. There are things you can fix, but often times the return will not be anywhere near the cost. Changing a flat roof to a sloped one will cost you money that you could allocate to the interior and get a much greater return on. It is not the money that necessarily is the issue, but worrying about how the next storm will impact the roof and what other damage it can cause. Many times, once you fix one thing it can open up a can of worms that leads to new issues. If you want to tackle the problem, solve it and move on.

Types of electrical, plumbing and interior design can all be changed, but the question you have to ask yourself is if they are worth the time, money and headache. You may think having a fireplace in the living room is nice, but do you really want a tenant using it. The same can be said about a pool or a hot tub. You may personally like these amenities, but for insurance reasons alone these may be items that you stay away from.

Mold and foundations issues are two of the more usual culprits. Both can present great deals if the issues are only minor, but if they are worse than first thought, they will be much more expensive. You also don’t know how bad the issues are with each until you start digging deeper and by that time you could either be the owner of the property or have to pass altogether. Like most anything else in real estate, it comes down to your risk/reward tolerance. Many investors will not even look at properties with even the slightest inkling of mold or foundations problems.

Whatever issues are on your list, they are there for a reason. You may have had a property with a similar problem in the past or know an associate that had trouble. You should try to be flexible and objective when evaluating every property, but at the end of the day, you need to buy properties that you are comfortable with and you will not second guess. If this means taking a few off your list, so be it. It is better to have a property that fits what you are looking to do from the start than to get into a purchase filled with regrets and second guesses. Whatever is a deal breaker for you is there for a reason; don’t let anyone talk you into or out of a property.

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