This episode of the High Return Real Estate Show focuses on the specific reasons why you should NOT buy certain properties.
Key Lessons Learned:
- Water in the basement is a very bad sign. Sealing a basement can be extremely expensive to fix.
- It can be pretty common, there are multiple reasons why water may be in the basement. You have to find out what the real issue is before dismissing it.
- A break in the sewer line can be a very expensive repair. Check with your local municipalities and whether they cover the costs from the property to the street level when it comes to the sewer line.
- The foundation is arguably the most important part of the structure of the house, if it’s broken it can lead to problems in the rest of the house.
- Be aware of systemic issues in the local area and it can pay to be able to trust the person you buy wholesale properties from. Do your due diligence to make sure the property is in the condition you are paying for and factor in the numbers for your business model.
Above Ground Issues
- Validate your market’s rents before purchasing. A small deviation can have a major impact on your long term ROI.
- Fire damage is always a bad sign. Unless you’re an expert you won’t know the extent of the damage.
- Zoning issues are often hidden and easy to miss. It can affect the property’s appraisal and make a cash out refi more difficult.
- You have to draw the line when it comes to the class of the property. The rehab should always match the class of the neighbourhood or you will decrease your overall ROI.
- Try to take emotion out of the buying process. Let the numbers dictate whether or not the deal makes sense.