The decision to buy a piece of real estate is not one that you should take lightly, as you need to negotiate and inspection to make sure you make a smart purchase. But when you buy a property, you should find out some details that make a difference in the quality of property and the property's potential to bring you cash flow. Here are some additional questions you should consider to make sure you get the most out of your property purchase.
Consider Rental Potential
One question you can consider with most residential properties is if you can rent it out as a cash flow property. When you own a single-family home or multi-unit property, look at the market rate in the are to determine how much rent you can charge for the property.
For example, if you own a duplex with two separate houses on each side, research on the internet to find out how much similar duplexes are renting for. If each unit can rent for $800 per month, the property has the potential to bring in $1,600 in rent each month. If your mortgage on the property is $1,200 that would potentially leave you with an extra $400 each month to put toward marketing the property and paying for expenses and upkeep on the property.
As a landlord, you would also need to look at the possibility of hiring a property manager to handle the management tasks, such as tenant screening and rent collection, and handling tenant problems. This would be an extra cost you would need to add in to your cash flow analysis to see if your property has good rental potential.
Inspect for Defects
Before you buy a property, you should look at the property in terms of any defects or damage it might have that will need to be addressed with repairs. Any damage on a property at the time you buy it immediately becomes your problem unless you find it before the purchase and negotiate its repairs and cost into the contract.
Hire a professional inspector to look at a property and inspect its systems and components. One area of importance you should highly consider inspecting is the home's HVAC, plumbing, electrical, foundation, and roof. Additionally you can hire a plumbing professional to complete an interior inspection of the plumbing main line from the home extending to the connection to the city sewer. This specialized inspection will give you an idea of the pipe's interior condition, what it is made up of, and if it needs repairs or full replacement.
If you're looking for a new home, contact local real estate agents to begin the process.