When you are going to invest in a property, it is crucial that you analyze it and make a determination as to whether or not it will be a wise investment or one that will cause you more headaches than it is worth. To do this, you want to look for red flags, any potential construction issues, and the design of the floor plan. When this is all put together, it can give you an overall view of the property and help you make your decisions.
To gather the information you will need, it is important that you do a walk-through of the property. Though, during this coronavirus pandemic, you may have to settle for a virtual tour. And, that’s ok, too. As you explore the property, here is what you are going to do:
Take photos. In fact, the more photos, the better. Think about it – you may never make it back to the property or you may question something after you have left. Photos can help put together a full picture for you as if you are there. Well, almost.
Take your time walking through the property, don’t rush. If at all possible, walk through it alone so that you have no distractions. Start walking the entire exterior of the home first. Pay attention to things like the siding, the roof, gutters, sewer line, electrical wiring, foundation, and the doors and windows. Then, walk the interior. Stay on high alert from the moment you walk in the front door. What does it smell like? Will you be able to make updates or renovations to make it more welcoming? Does it even need any renovations at all? How functional is the floor plan?
Your entire time at the property needs to be spent imprinting it in your mind. You need to be able to think like an investor, but also like a tenant. Do not just take mental notes and photos, but also jot down anything that comes to mind at all.
If you see anything that may require construction costs, whether it is a renovation inside, issues with the roof or windows, and so forth. Unless you have expert knowledge of these costs, consult a professional so that you have a clear idea of expenses you may face. Again, this is where your photo skills will come in handy.
Once you have gathered all your information, create a spreadsheet with all the information you’ve obtained, ideas you have to renovate, and costing for repairs, etc. Even consider doing a breakdown room by room. This is best way to give yourself a clear view of the property’s overall potential.
With every property you add to your investment portfolio, you should be carefully analyzing it and determining whether is going to lift up that portfolio or drag it down. The more you do this, the more comfortable you will get. But always – always – keep a keen eye when reviewing an investment.
