Real estate ranks among the oldest and most popular ways to make your fortune in Charlotte, NC, and elsewhere. Advanced education isn't required: just the determination to succeed. Even better, property values nearly always increase. However, it's also said that if something seems too good to be true, it probably is. It pays to educate yourself about real estate investment deals before shady sellers attempt to saddle you with a boondoggle. Look for these red flags.
When Is Real Estate Investment Too Risky in Charlotte, NC? 7 Red Flags
1. Diamond in a Rough Neighborhood
Pay attention to the surrounding area when arriving to inspect a property. Arrive early and drive around the neighborhood, in fact. Surrounding homes in poor or unkempt condition lower the value of the sparkling house you're considering. Boarded businesses and vacant lots also warn that the area is on the wane. Research your property online to learn its selling history and that of similar properties nearby. Don't pay above market value for a coat of paint and freshly cut lawn.
2. Numbers Don't Lie
Searching for a deal in a neighborhood is all well and good, but you should investigate when a selling price appears to be significantly out of line. Owners who have taken loving care of their property may overvalue it. Talking them down off a high price won't be easy. Conversely, bargain-basement prices could mean something is terribly wrong with the property. Check the basement, the attic, and the closet for skeletons. Know why a property is priced as it is.
3. Always Suspect When Asked to Waive Your Right To Inspect
Fixer-uppers are often marked "as is" when they need work. Just how much work indicates whether the asking price offers an opportunity to make renovations and flip the house for a decent profit. Every real estate investor should retain a professional property inspector who can diagnose a building's condition. They can read the cracks in the walls, understand the creaks in the floorboards, and tell good investments from bad. When the seller wants you to waive that inspection, be concerned.
4. Beware the Seller Who Acts Like a Game Show Host
It pays to know what you're buying beforehand. If a home is being shown, but certain doors are locked, insist on seeing what is behind them. Locking a room might be nothing more than a simple desire for privacy or to protect valuables with all sorts of strangers walking through. On the other hand, it could be a way to conceal significant water damage or other issues that drastically affect the property's value.
5. History Repeats With Bad Investments, Too
Both a property's resale and repair history are a matter of public record and can reveal several red flags. Do your research. It may save you from taking a heavy loss.
Resale History
Two red flags frequently appear in a home's resale history. Be careful with seemingly attractive properties that have been sold several times over a short period or listed for ages without attracting interest. They may suffer from a neighborhood issue. Communities look different during the day, at night, and when everyone is at work. Multiple visits at other times of the day and week could expose the problem.
Repair History
When a disclosure packet reveals a long history of repairs, it's wise to look deeper into structural issues. There could be problems with the foundation, roof, or electrical system. Termites or other infestations might be present. Any of these issues and more could affect your investment decision. Again, it pays to have an experienced home inspector on retainer to help you uncover significant problems with a property.
6. Don't Forget the Present
Financial liens aren't the sort of gift an investor wishes to receive. Always conduct a property search to guarantee that none have been placed on the property. If you do not, then the previous owner's obligation to pay these outstanding notes is passed to you, and they must be satisfied before you can take full possession of the property.
7. Don't Judge a Property By Its Covering
Beware of cosmetic repairs made both in and outside the home. Fresh paint on the walls, new doors, blinds, and baseboards throughout the house, appliances and fixtures in the kitchen and bath, and a mailbox and address numbers outside are all quick, affordable fixes that may mask more profound problems. A beautiful investment isn't superficial. These tricks should be setting off loud alarms in your head rather than serving as seductive sirens luring you into a money pit. Proceed with caution.
As a real estate investor seeking properties that can quickly turn into profit with minimal out-of-pocket expense, it pays to watch for these red flags. It also pays to form partnerships with brokers, contractors, and other parties who believe in operating transparently to create better investment opportunities. Contact Better Path today to help us put you in touch with the right sellers and properties for you.
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