Simple Tests to Find Good Real Estate Investment Properties II

The Pricing Test

Is the home listed with a Realtor, or is it a FSBO? How realistic is the asking price? Is it in your price range? Can you work out a low or no-money-down financing option? How open to Negotiation is the seller? Will you be able to realize a profit after making needed repairs?

The Test Condition

This is one of the most important tests. The property you want to buy does not require any extensive, expensive repairs. It should be structurally sound, without any major plumbing or electrical problems. If you’re just starting out, you’ll want a property with repairs you can manage yourself – repainting, refinishing floors, a little landscaping. If the property requires more extensive repairs, it will cut into your profit, or eliminate it altogether.

When you view the property, really kick the tires. Look for indicators of hidden problems. Here are a few things to look for:

* Moisture stains on walls and ceilings could indicate plumbing problems

* Little piles of sawdust near Corners or woodwork could mean termites.

* Separations between floor and wall, especially outer walls which could indicate Structural problems.

* Lift tiles in suspended ceilings to examine the ceilings above for loose plaster, moisture stains and other indications of problems

The final test is the test title. Be certain that the title to the property is clear, with no liens or attachments that could sour the sale. If there are, and you still want the property, work out a conditional sale, where your purchase is contingent upon the liens being satisfied.

If the property passes all of the above tests with flying colors, congratulate yourself. You’ve got yourself an investment property that could turn a pretty profit for you.