5 Mistakes to Avoid When Buying Your Next Investment Property

Finding a good deal on an investment property on paper is only half the battle. The other side of real estate investing is physically inspecting the real estate investment property for faults in terms of structure, legal title, and other liens that may exist on the property. You don’t want to spend a lot of money later to recover from the terrible mistake you did. This post will discuss five factors to consider while looking for your next investment property.

1. Electrical and Water Problems

To begin, unless you find a severely run-down property and intend to knock it down to its foundations, you should look for properties that may have possible electrical and water plumbing concerns. This is crucial since wiring and water piping are typically hidden behind walls and other furniture fittings, and repairing them can be a pricey endeavor because you must hack into the walls and run the piping and wiring if the damage is severe. If you are new to property investing, attempt to bring an electrical engineer with you when inspecting properties.

2. Foundation Problems

Second, foundation issues are typically more difficult to detect. Look for cracks emerging on the exterior of the house and the foundation that goes into the ground as you go around the property. Look for significant irregular holes on the property’s side and cracks in the building’s external paint. If you anticipate that the repairs will be extensive, you should bring in a civil engineer and a contractor to determine how much it will cost to repair the property. You can also invite them along to offer the house owner a “grim estimate” and lower the price of the property.

3. Roofing Problems

Third, if you are purchasing real estate for tenancy purposes, roofing issues might be a constant nightmare for you and your possible tenant. Look around the ceiling near the windows and around the borders of the walls for new paint, yellow patches, or cracks with water in them when assessing the house. Most sellers would be wise enough to remove water bubbles after a hard rain while trying to sell the home, but it is always crucial to determine if there is a large leaking roof that will cost you a lot of money to repair. If you are interested in the home, you can use this flaw to further negotiate the price.

4. Legal Problems

Fourth, another reason why the investment property in question can be a steal is that it is plagued by legal issues. Common examples are several owners who cannot agree on whether or not to sell. Litigation here would be pointless, and you should avoid such property if you come across it.

Another issue could be a lack of a clean title. Did you know that the seller may be selling you only the building and not the land, or that there may be existing tax liens or other liens on your property that will prevent you from obtaining sound title to the property? Spending some time talking with a trustworthy real estate attorney to learn about prevalent real estate issues in your area might save you a lot of legal trouble later.

5. Bankruptcy Problems

Fifth, depending on the legal proceedings in your state, the bankruptcy of your seller or one of the joint owners of your real estate may hinder your capacity to transfer the title promptly. Most states require the receiver of the bankruptcy to agree, therefore pay close attention to your state’s bankruptcy legislation. However, banks may be eager to sell you at a discount in order to fast recover bad debts, so do your study before purchasing such an investment property.


These five potential pitfalls may serve as a starting point for you to examine your property investment. Spend some time thinking rationally about the properties you’ve visited and determine whether they have any of the aforementioned faults. Consider whether you want to continue purchasing them and whether the price of fixing them would justify the property’s discount to market value.

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