When it comes to choosing a property that will require a lot of time, effort and investment, it is important to not have too many surprises pop up (preferably none) in the process of maintaining it and building it to serve your needs.
In order to avoid these real estate pot holes on the road to financial gain, you need to know what to look out for.
For starters, when your looking at a property, you need to familiarize yourself with the environment’s market rent, vacancy rate and the required maintenance obligations and property upkeep. These factors play a large role in the potential a property can have, and the results your investment will bring.
There are four main things to pay close attention to, that will help you notice the red flags of a property and the true potential they hold!
If there are any questionable things that align with these four areas, there is a strong chance that the property will not pan out the results your hoping for. To better understand why, we will break down the four factors and the potential danger that lie within.
A properties age is the first clear indicator of the required maintenance the property needs and can help to understand the additional costs right off the bat. Naturally, that means the newer property will have less maintenance needs, however that also means you will have to have a stronger reserve in your funds on the chance you need to replace a major property feature like the roof or plumbing.
The age of a property also tells you the materials used when building, which can be a great indicator of potential health risks. For example, if your home is older than 1980 then there is a good chance the paint was lead based, which is a huge health concern and also the use of asbestos was still going strong.
So when it comes to the age of a property, understand the materials involved in it’s construction, ensuring harmful material like lead and asbestos was not involved. Also understand the difference in potential maintenance needs.
To understand a neighborhood, you need to look further than the geographic location. Think about the actual people around the property, go meet them, and understand their role in the community.
Bad neighbors can result in a negative experience for every aspect of real estate. They can bring down a properties marketability, resulting in difficulties maintaining occupants, and the flow of revenue.
A great way to analyze the environment around a property, take time to visit the property often and at all times of the day to understand the habits and common occurrences around the property. Look for signs like piles of trash, cluttered yards, undriveable cars, and overrun landscaping. Also make sure to pay attention to noise, especially barking dogs. No one enjoys hearing dogs consistently barking a storm, but aside from dogs, look for loud music, audible arguments, power tools and the like.
To summarize, check the environment of a property at all times of the day of each day to understand what potential problems may arise if an occupant were to be living there.
Maintenance is one of the trickier areas to prepare for. Because maintenance is not a fixed expense, there is potential for it to cost much more than you can handle, so it is a good idea to put aside 1-2% of the purchase price of your home a year for routine maintenance and keep things from getting out of hand.
Specifically, there are three important areas to look at when it comes to property maintenance, these are some of the larger factors that can be a big hassle, but are also able to be checked out before purchasing to have a better idea of the properties potential.
- The Roof: The roof is an expensive endeavor, and if it needs replacing within a three year time span, that will be an added $10,000-$20,000 purchase.
- Water Damage: Check the home for old or recurring water damage as this will give an idea of potential larger damage in an area of the home behinds walls and under floors and such. These fixes will accrue extra cost over time until they are taken care of permanently.
- Exterior Paint: Find out if the property has had routine applications of exterior paint applied to protect the structural integrity of the home. You will notice rot or damage from the lack of paint and this will indicate some more expenses that may fall out of your potential affordability.
Landscaping has great potential in adding to curb appeal and the overall value of a property, however sometimes landscaping can cause some issues in the future and cause some regret.
Acknowledge the trees on a properties site and the location of the roots and it’s system. Roots can sometimes cause issues or even damage with underground utilities, naturally resulting in a headache and added costs.
Determining if a tree will cause problems is rather difficult, however older, bigger trees tend to have root systems that are longer and bigger, resulting in a larger cost if removal becomes necessary. Trees planted in the middle of the yard can also pose problems.
To help evaluate the trees interaction with the structure of the property and the utilities, look for cracks and damage caused by roots. You can check the driveway and sidewalk or walkway to the front door as these will likely indicate if there are problems unseen.
Numbers are the game, and paying attention to the details are the necessities. If the numbers are adding faster than you can afford, walk away, and if the red flags result in the home becoming a large renovation project, save yourself the time and hassle.
Age, maintenance, landscape and neighborhood all play a large role in the potential of a property. Pay attention to these factors and we are certain you will be able to choose a property that will result in you achieving your goals.
We at Kontor Realty are here to keep you ahead of the curve. Give us a call or send us an email and let’s talk about your future in the real estate market!