Red Flags to Watch Out for When Buying a Rental Property

When you are in the market to invest in real estate in Florida, one step you will need to take is to tour prospective rental properties. While you are checking out these properties, what red flags should you be on the lookout for? Let’s go over them now.

Red Flags To Lookout When Buying a Rental Property

• Maintenance issues: Badly-maintained spaces or utilities are a major red flag when you are shopping for an investment property. Anything that the current owner has not deal with is something you will need to deal with yourself. Where you spot one problem, others may be lurking unseen. An inspector should be able to catch most of them, but some can still be missed, or concealed beneath questionable repairs.

• Safety problems: Be on the lookout for any types of safety hazards or security flaws that could present a danger to your tenants. Remember, you may be liable for any injuries or damages they suffer.

• Pests: Check carefully for any signs of pest infestations, i.e. droppings, wood damage, etc. Also be aware that some types of pest infestations may not display any visible evidence. But you might be able to spot warning signs in your environment that pests could be present (i.e. if you buy an RV park next to a facility where someone is improperly disposing of trash, that could attract mice or rats to the property you are thinking of buying).

• Zoning/building code violations: If you see anything that is not up to code, or which is a violation of zoning ordinances, you will either need to be ready to correct those issues or move on to different properties.

• The existing tenants cause problems: When you purchase a rental property and take over as its owner, you will inherit the existing tenants along with any problems they may be causing. While you can certainly give them notice to leave, it is often easier to just start out with a property that already has solid tenants bringing in rental income.

• Anything misleading: Is there a mismatch between the photos and information you were given about the rental property versus what you are seeing when you check it out in person? If the owner has misled you about some things, they probably have misled you about others too.

• The property changes hands often: Check the sale history for the property. When is the last time it was purchased? How frequently is it bought and sold? A property that frequently changes hands is not always a red flag, but it certainly can be. Sometimes a property is bought and sold often because it has deep underlying problems that are hard to resolve.

• A lack of transparency: If the current owner of the property dodges questions or misleads you about anything, that is a sure sign that something is awry.

If you do notice any red flags during your tour, you have two options. You can either move on with your property search, or you can investigate. If it turns out to be something you think you can handle, you may be able to use it to negotiate down the price.

Hopefully, however, your property tour will conclude without any red flags. At that point, if the property fits within your budget and goals, it may be time to add it to your real estate investment portfolio.

Buy a Rental Property in Florida with an Affordable Loan

Now you know what red flags to look for when you are touring rental properties. Once you do find a suitable property in which to invest, you can maximize the return on your investment by buying it with a competitive loan. Lending Bankers Mortgage can help you close fast on your next real estate investment property. To begin the loan application process, please give us a call at (786) 220-1100.