Warning Signs Investors Shouldn’t Ignore When Purchasing Rental Properties

Warning Signs Investors Shouldn’t Ignore When Purchasing Rental Properties

By: Kim Hoffman

Buyer beware when purchasing turnkey rental properties.  The following are a few red flags when considering a particular property.

  1. Turnkey marketers

Rental properties heavily marketed may not be such a good deal if the marketing agent is selling someone else’s property.  Be mindful that typically these people will mark up their prices to cover marketing expenses.  Sometimes it may be a good deal but definitely have your agent run check area pricing..

  1. Cash only deals

Lenders may not fund if property is priced higher than value.  Make sure to get a property inspection and appraisal to ensure you will not be in the negative upon purchase.

As most are aware of, sometimes sellers put large investments into homes and add upgrades while living in the home.  Sometimes they do not justify increasing the value of the home enough to recoup all of their initial investment.

  1. Seller requires a large down payment

Sellers offering to finance the property themselves will typically require a larger down payment.  This is not a bad option for those who have multiple properties and cant get traditional financing.  However, again, beware that your appraisal meets the price of the property you are considering to purchase.

  1. Location! Location! Location!

There are motivated sellers that are offering good deals claiming high returns on investments.  Make sure to check area statistics for crime and schools before purchasing.   If you intend to fix-n-flip, you may be sitting on a property for some time if the area isn’t “family friendly”.  Consult with an experienced realtor as they know which areas and potential rental properties to stay away from.

 

 

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