Whether you’re flipping a home or investing in a rental, there are processes you need to go through to ensure that you’re getting a good deal. Even when things appear great on the surface, there are often hidden issues that could really turn into a money pit. By knowing and understanding these potential nightmares, you can learn to avoid them.
1. Hidden Problems with the Home
Not too long ago, a couple purchased a beautiful home that, on the surface, appeared to be well taken care of and healthy. However, they soon discovered that the wood between the window panes was rotten, which led to a larger discovery of a termite problem.
In addition, asbestos was present on the siding, which made it extremely difficult to get the windows replaced. Overall, the repair cost was several thousand dollars. Always have a home inspected, look it over yourself, and get an inspection contingency in your contract so that if issues are found, you can back out of the deal if you want.
2. Home Owner’s Associations Horrors
If you don’t plan on living in the home you purchase, it may not be such a big deal, but you could face some serious irritation if the home is part of a homeowner’s association. In one area, the homeowner’s association decided wooden decks were unattractive.
It made all residents replace their wooden decks (even newer ones), and expected residents to pay for the replacement. In another area, a resident was fined over $3,000 because he had pink flamingos in his yard. Beware the evil homeowner’s association when purchasing a house.
3. Financial Problems
Some banks will expect you to jump through hoops to get the funding you need for a home. Even if your documentation shows that you can afford the payments and you’ve gone through the particular bank before, problems and delays shouldn’t surprise you. “Some bank managers act like you’re taking the money right out of their own pocket,” says Ryan Wright of DoHardMoney.com (http://www.dohardmoney.com/). “Finding easier financial solutions with better terms is essential when purchasing real estate.”
Wait. Is this really a problem? Actually, yes; the incidences of homes being taken over by squatters are growing. One man began repairing his rental home when the tenant moved out, only to find that an entire family had moved in overnight. The family claimed they’d paid money to someone claiming to be the landlord. The result: the courts required the homeowner to go to court to legally evict the squatters, and wouldn’t allow him to turn off any utilities while the squatters were present in the home.
5. Surprises at Closing
When you’ve gotten your finances together to purchase a home and you think you’ve paid everything you need to, nothing is worse than being surprised at closing. If you find that suddenly your interest rate is higher than it should have been or the closing costs are not what you expected, go through the numbers with your agent. Make sure they’re correct and you’re not being taken advantage of.
When you are able to anticipate these types of problems, you can often head them off before they become real issues. By being a wise investor, you can prevent yourself from being taken advantage of or having to deal with these real estate nightmares.
Brought to you by Goldblum Real Estate, a top notch real estate agency in Los Angeles California.
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