To be successful as an investor is to make the numbers add up to the highest return on your investment dollar in passive income. Done right, investing can be very profitable and provide security for your retirement. In addition, diversification offers you a well-balanced portfolio, building in a hedge against inflation. You should have investments from every market sector, which brings us to single-family homes. Read on as we explore five of the red flags to look for when buying a single-family home for investment in TN.
Location
If you don’t get a good feeling about the property’s surroundings, this is one of the red flags to look for when buying a single-family home for investment in TN. Even the best single-family home can’t outweigh a bad neighborhood and affects property values, rental rates, and issues with occupancy, damages, and crime. Unfortunately, new investors often find the least expensive property available without considering how the location can affect your cash flow, and the future outlook can substantially influence the numbers. However, suppose you are aware of city planning involving added improvements, and you notice other recently rehabilitated properties. In that case, it may be worth taking a deeper look at jumping into an investment in a location in the early stages of revitalization.
Unpermitted Work
Cutting corners and avoiding permits for home improvements is a common way for homeowners to save money. However, when buying a single-family home for investment in TN, it’s important to look out for unpermitted work, as it can be a significant red flag. Not only does unpermitted work increase the risk of unsafe and non-compliant construction, but it can also lead to legal and financial issues in the future.
It’s essential to ensure that all work on the property is done legally and to code. Unpermitted work may require you to completely demolish and rebuild the work under the proper permitting and building procedures, costing you a significant amount of time and money. Working with a professional home inspector or contractor can help you identify any unpermitted work and avoid potential problems down the line.
Water Damage
Mold is a serious issue that can arise in homes, especially where water damage has occurred. Therefore, it’s essential to be vigilant about water signs and take them seriously when considering buying a single-family home for investment in TN. The presence of mold is a major red flag that should not be ignored. However, if the mold issue has been remediated by a professional recently, and there is proper documentation of the work done, the investment may still be worth considering, even if the owners didn’t repair the damage themselves. In such cases, it’s crucial to ensure that the remediation was done correctly and that the problem won’t resurface in the future.
History
Foreclosed homes can be a tempting option for real estate investors looking for a deal, but it’s important to be aware of the potential issues. One of the most significant red flags to look for when buying a single-family home for investment in TN is a history of foreclosure. When homeowners lose their homes to foreclosure, they may cause significant damage before vacating the property, leaving it in a state of disrepair.
Furthermore, foreclosed homes are often left abandoned and neglected for an extended period, leading to further damage and disrepair. A minor issue that could have been easily fixed, such as a leaky roof, may turn into a costly repair due to prolonged neglect. As an investor, it’s essential to conduct a thorough inspection of the property and understand its history before making a purchase to avoid unforeseen expenses and potential headaches down the line.
Pests
Pests can be a significant problem when buying a single-family home for investment in TN, and signs of infestation are a red flag that should not be ignored. Whether it’s rodents, insects, or other pests, these unwanted guests can cause significant damage to a property and be expensive to remove. Signs of infestation can include animal or insect waste, chewed wires or insulation, and visible entry points. It’s essential to work with experienced professionals like pest inspectors and exterminators to identify and address any pest problems before making a purchase. By doing so, you can avoid the headaches and expenses that come with dealing with pests and protect your investment in the long run.
Wouldn’t it be great to have someone working with you to help you watch out for these and all of the other red flags that investors like you should look for when buying a single-family home for investment in TN?
Why not call on the full-service team at Memphis Home Buyers to help you? And don’t forget to ask about our current inventory of the best single-family homes available in TN right now! Contact Memphis Home Buyers today at (901) 828-8419.