INVESTOR RESOURCES
RED FLAGS
Five Red Flags Telling You toWalk Away
by Stacy Brown, Real Property Management
S
uccessful real estate investors know there are many reasons an otherwise viable deal can go south. Some involve the condition of the property and others may be a result of seller issues. Identifying deal-breaking red flags can help you better avoid some of the most common – and costly – investment mistakes. 1- POOR COMMUNICATION When working with a seller, a real estate agent, or lender for the first time, negotiating different communication styles can be challenging. Consistent poor communication should be considered evidence of an underlying issue, at best, and something going seriously wrong, at worst. If you’ve encouraged good communication yet still encounter silence or hesitation, consider walking away. 2- DISHONEST SELLERS Some sellers try to hide problems in order to sell their property faster or for more money. A seller working hard to cover up cracks in the foundation, a failing roof, or plumbing problems can go about it in any number of ways. Once you recognize a seller’s deception, it is up to you to either confront them or cancel the sale – or both.
sellers may not even realize they have a mold problem until the property is inspected as part of the sale. While not all mold is toxic or particularly aggressive, some can be nearly impossible to get rid of for good, resulting in an expensive, ongoing problem.
4- TERMITES Over time, termites can cause significant structural damage to a rental home, resulting in expensive repairs. While the seller is responsible to disclose whether the property has a termite problem, it’s a good idea to have the property checked yourself. 5- SEWER ISSUES Sewer problems can be difficult to know about in advance, especially if the sellers are trying to downplay any issues. There are certain warning signs an investor can look for, and a quality home inspection may be able to help. If any sewer problems are disclosed or discovered, it is probably better to back out of the deal immediately. Sewer issues are a serious biohazard and can be very expensive to deal with, both of which will make your rental income suffer. For single-family rental property investors, having a solid purchase strategy is the most important approach to knowing when to walk away. •
3- MOLD The presence of mold can be a serious problem and
94 | think realty magazine :: march 2020
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