Investment Property Purchase Checklist

[Corey Dutton]

I had dinner with a real estate investor friend of mine last night who we’ve done a lot of hard money loans for in the past. We talked about some important things to look out for when buying your first investment property. Please add to this list and contribute to this discussion:

1. Always get a full inspection report.
2. Make sure all structures on the property are legal structures.
3. Get an appraisal report if there’s any question on comps.
4. If buying a rental, even if the price of the property is next to nothing, make sure your holding costs on the property don’t cause you to have a negative cash flow.
5. Never buy a house on the top of a hill or with a steep driveway. Harder to sell.
6. Talk to the neighbors about the history of the property to uncover anything that is unknown to the realtor.
7. Find out how much the HOA dues are and make sure you figure in that number.
8. Make sure you have sufficient cash or hard money financing lined up to complete the purchase and the repairs. In other words, don’t stretch yourself too thin on money.

What else would you add to this list? Thanks for sharing.

[Steve Babiak]

Surprised that nobody has yet mentioned utilities. Some people just have to have the fastest internet access, cable TV, satellite, etc. In my area, people are starting to hate having oil heat (actually anything other than natural gas), so when we look at houses heated with fuel other than gas, we check with the gas company to see if there is a main close enough to tie into. Well and septic vs public water and public sewer can be an issue too.