Most people in the real estate investment business hope to find that “great deal” for the right price to add to their portfolio; but many times the property that has that great price may have a few issues that can make it a bit more challenging to purchase…and insure.
When searching for real estate, here are some common buzz words to be mindful of:
Purchase “as is”
Some renovations required
Vacant or lower occupancy
Needs TLC or right management
While these are enticing teasers and may actually hold a great opportunity, it can offer some challenges when it comes to insuring the property. Listed below are some helpful questions to consider when purchasing a “fixer upper”.
What is the current status of the property? What is the current occupancy as compares to the neighborhood? What are the conditions of the units? Can you obtain a list of what renovations have been done? What is your ability to continue the renovations? Do you need a contractor to help determine the costs and to perform the work?
Have there been any claims at the property? Can you obtain prior claims history? Have all damages from claims been repaired?
Determine the age of any repairs done during the lifetime of the property; also determine the type of wiring.
Why is the occupancy low? Is it due to the current ownership/management or will the local conditions and neighborhood allow you to increase occupancy to an acceptable condition or is the occupancy similar to other local properties?
What can you do differently to help the property? Be specific.
What renovations or improvements can you do to improve the property? Be specific and have a budget.
Have a schedule of renovations and detail when either units or buildings will come on line.
What new marketing will you be doing? Onsite management? Better maintenance?
Are there underlying issues, what type of wiring, stab loss breakers, major updates needed?
Does the property insure differently from other properties in your portfolio?
We hope you find these questions helpful when searching for additional real estate to add to your portfolio. At Ramey King, your agent will want to get started as soon as possible and looks forward to helping you with your new property. Contact us today with any questions.