Buying Real Estate Investments - Part 4 of a 6 - Touring Properties

So you found a Realtor, Wholesaler, Property Manager or other professional that you would like to work with in finding your next real estate investment. Or maybe you're doing this on your own. All good. Now it's time to tour! Well not quite yet here in Pittsburgh, PA, but things are scheduled to open up Friday, May 15th, with safety precautions. While you've been waiting, you've obtained that pre-approval and have carefully compared a list of properties found. Having that list narrowed down to a focused few, you're ready to go see them. And when it's time to see properties in person, have your personal protective equipment ready....hand sanitizer, gloves and masks. And for your feet, possibly coverings though many sellers request that people remove their shoes anyway. Not so much with investment properties. With that said, I'm going to continue writing this blog for when we CAN get back to physically seeing properties in person. When that happens though it's still sound advice to "not shake hands" and adhere to "social distancing" as I'm sure those practices will still be around for quite some time.

Ok, enough with the public service announcement, lol. So where to begin? Get organized! Work your list into areas to save travel time. Use your real estate advocate to find out what the showing arrangements are. You can't just drive up to a property, knock on the door and ask to see the home. Everyone has lives and need advance notice. (A Seller's listing agent should have primed them to never allow anyone inside without notice.) So your representative will set this up for you. A listed property may have anywhere from a 24 hour notice to slightly longer, especially if it's a multi-unit as owner and tenants need notice that you will be coming. When you go see the property, take something to make notes and checklists with. Please request permission to photograph or video an occupied property!

Do your choices check off most, if not all, of your boxes on your lists of wants and needs? Looking at these homes or investment properties, it's important to scrutinize and make notes to yourself. These will become invaluable later when comparing, because it's easy to forget as you tour many properties. Plus you may have additional questions that cannot be answered in that first visit. And don't be afraid to ask to go back. Some questions to ask may include:

1. Does it have enough storage space for you?
2. What are the room sizes and does the floor plan work for you?
3. Will it cost a fortune to heat?
4. Is it in a good neighborhood?
5. What are the area amenities?
6. How much will I have to put into it to get it to where I want?
7. What is the condition of the roof and gutter system?
8. What is the condition of the air conditioner, furnace, water tank, electrical boxes?
9. Might it increase in value?
10. Why do the sellers want to move or sell?
11. And additional for investors: What are the rents? operating costs? potential returns and cash flow?

A good real estate pro will be able to point out questionable issues that may need further review by you or an industry professional. They should be getting you those disclosures and suggesting an inspection contingency included with the offer. Assuming you have had an in-depth conversation with them as to your needs and desires, they will be able to offer insight into how this property may or may not work for you. Your advocate will notice things you may not have and should be more objective... so use them as your sounding board! It's important to overlook such things as how the furniture is arranged or the color of the walls. Those things can and probably will be changed. Yes, we would all love a "move in ready" home, but our tastes are different so keep that in mind. But by the same token, don't look past water in the basement, cracks in the foundation, bowed floors, crooked walls or windows that look off kilter as this may indicate structural issues. Those items need addressed before making a decision as they may indicate more serious issues. Keep your list of the "Pros & Cons" handy to compare to your "Wants & Needs" list.

And while making those lists, please ensure you are comparing "apples to apples" not "apples to oranges". Obviously higher end homes don't compare well with less pricey ones. Also a home in one neighborhood may not compare to a similar home in another neighborhood. An older victorian is not the same as a contemporary modern. Yes, obvious there, but you get the idea. And in order to get to the point of comparing properties, you may have to ask a lot of questions. Besides the ones listed above, some additional ones should include finding out how long the home has been on the market as this can become a valuable negotiating factor. Is it priced right? Your real estate professional will help you with this by pulling comparables. Review what repairs will need to be made vs those you may want to do. While some issues may not come up until a formal inspection is done (that process typically happens after an offer is accepted), your eye can be a good initial judge of any issues.

It's very easy to fall in love with a home as you tour it, but having an impartial friend or ally with you is your valuable source for objectivity. While they will point out the positives they will also point out the potential negatives and tell you when you should just walk away from something. Especially if you're looking at real estate as an investment property, objectivity prevails. Operating costs, potential returns and cash flow will most likely factor into an investor's decision, not necessarily the color of the siding.

So you've narrowed your search, toured the properties, made your comparisons and have chosen one or, in some cases, more than one! What next? Make them an offer!! Stay tuned for that next step that will help you to make a solid offer. Thanks for reading and sharing.