As a Stone Mountain rental property investor, you are perhaps on the lookout for another rental property to purchase. Nevertheless, there are instances when it will be necessary to back out of a real estate deal. Recognizing when to keep moving forward and when to walk away is one of the most important ways to guarantee you’re choosing rental homes that will offer a good return on your investment. The most successful rental property investors go into every deal with a list of deal-breakers already in mind. We’ll take a closer look at some of the top reasons to back out of a real estate deal in what follows.
The Appraisal is Too Low
There’s not a lot of things that can cause a real estate deal to end abruptly faster than an appraisal that is too low. As you gather information about the property and crunch the numbers, you should decide exactly how much you want to put down and finance. If the appraisal isn’t high enough to back the full amount of loan you need, walk away.
The Monthly Payments are Too High
Occasionally, the financing you need to purchase a new rental property doesn’t quite add up the way you need it. If you can’t get the rate you need, even after working with more than one lender, it’s best to move on. A monthly mortgage payment that will put a strain on your cash flows may be a recipe for disaster.
The Inspection Reveals Major Problems
Regarding financial issues, property condition is one of the top reasons to back out of a real estate deal. Most properties will need some repairs and improvements as you get them ready to rent. But suppose your property inspection reveals major issues that will require expensive repairs. In that case, your best option is to pass it up unless you feel confident that you have the cash and a great contractor who can handle the repairs, a property with big glitches usually isn’t worth the effort.
Inaccurate Information in the Listing
While most real estate agents try to conduct their business with integrity, there are a few out there that don’t. Some may try to unload a problem property by putting false or misleading information in the listing or failing to disclose important information. If you feel any shady dealings are in the works, your best move is to walk away from the deal. There may be other things the sellers and their agents are trying to hide that will spell expensive trouble for you as you go along.
Previous Work Done Without Permits
Buying a remodeled property can lead to finding some great real estate deals. But if you discover that the previous owner made significant changes to the property, such as an addition or building a deck, be sure that they can prove they had the permits to do so. If the local building authority comes back and decides those changes violate permit regulations, you will wind up paying the fines. If you can’t find permits for any work done, it might be better to move on.
You Feel Pressured to Make an Offer
In competitive markets, you may need to move quickly when you find the right property. But you should never buy a property simply because you feel pressured to do so. Whether that pressure is coming from a real estate agent or from a desire to meet your own investing goals, buying under pressure can lead to making poor decisions that may end up costing you in a big way. If you feel like you haven’t had time to do your due diligence on a property, the best thing to do is resist the urge to buy it anyway.
Are you in the market for your next Stone Mountain rental property? Real Property Management Citywide can help! We work with real estate investors at all levels, helping you find great off-market deals. Contact us today!
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