Know When to Walk Away From a Deal.
Recently, on more than one occasion, I have had clients walk away from property purchases, due to major “red flags.” I have a conservative approach on what I will show my clients but no building is perfect so it is important to have your wits about you when buying real estate. Below are a few tips to help avoid buying a “money pit” when purchasing real estate.
1) Follow your gut. If you have a bad feeling about something, ask more questions, follow up, and make sure you are satisfied with the answers you get. If you’re not getting what you need or feel like your getting only half of the truth, then consider walking away. I have seen many cases where what we were told on the surface of things did not turn out to be the actual case. An example of this is rental income. Often one number is verbally shared and then it does not match what is actually on the lease agreement. So be sure to verify your numbers and check on the details. Often I find one falsehood, sometimes then more are uncovered, so be aware!
2) Take your time to really look through the property. Spend some time looking up at the ceiling, then at eye level, following through to looking down to the ground in each room, and notice all the corners, too. Think about what a room needs. For example, heat registers may be missing, or perhaps there are water stains on the ceiling, or ceiling patches that don’t match in texture. Take the time to ask more about these types of issues and make sure you are comfortable with the answers. Sometimes, the more you find out, the slower you should be proceeding.
3) Get someone you trust to look at the property objectively with you. You know what you know and see what you see, but a second set of eyes can be very helpful for a different perspective. Not everyone pays attention to the same things! This can start out with a friend but often people will take the next step of using a professional home inspector who can give you a straightforward analysis on the home you are about to buy.
4) For strata properties, get an idea up front from the strata documents package (eg The Minutes, Rules & Regulations, By-lasws, Budget and so on). This is the best way to learn the “personality” of the Strata. Are they proactive and working with “Depreciation Reports” or do they try and cut costs and push off projects due to lack of resources? One of the best ways to maintain value in a home is maintenance and it will show one way or another.
5) Purchasing real estate is a REALLY big deal so make sure you are confident in what you are buying by using good professionals to help expand your knowledge and fill in the gaps. Cutting corners up front to save a few dollars later could cost you much more in the long run.
At the end of the day, if you do not feel confident, sure or relaxed about the buying process perhaps re-evaluate your position to see if this truly is the best move for you. There are always other opportunities out there just as good or better than what you may pass up. So don’t despair! There will always be another opportunity!