It is normal to encounter challenges in every business at different intervals. The same applies in the real estate industry as it is expected to encounter some problematic properties from time to time. Being well informed on how best to deal with these kinds of transactions would save you a lot of money as an investor.
Read more on How to Make Money From Real Estate in Nigeria, 2021
How to Know If a Property is Problematic?
There are different signs with which you can identify if a property is a problematic one. Some of these signs include;
Too Good to Be True
When the deal is too good to be true, it is possibly a sign that the property about to be sold is a problematic one. As much as the goal of every investor is to land a good deal, when a property is being sold way below the normal or current market price, it should raise a red flag and lead you to doing more research.
Legal Contention
When a property is under legal dispute, it is usually advisable to steer clear of it until the bone of contention is resolved. Deciding to carry on with the investment could result in greater financial losses in time to come. This is because the property might be declared out of bounds or awarded to the party/persons different from whom you paid to.
Location
Location is a very important element in real estate as it has a great impact on the potentials of your investment. If the property, no matter how beautiful or luxurious it is, is located in a rowdy or notorious neighborhood, you could be exposed to theft, vandalism and other security issues. This also makes it harder for you to resell the property if you have plans to do so.
Seller/Agent’s Suspicious Behavior
If the agents or owners are putting up suspicious behaviors like being evasive about answering certain questions or trying to hurry up the transaction, then that could be a major pointer to a problematic property.
When investing in real estate, you have to carry out your research and ask as many questions as possible. If you’re being cajoled to purchase the property in a hurry then you should stop and thoroughly review the transaction you’re about to carry out. Real estate investments usually require patience and research.
Read more on Questions to Ask Your Real Estate Agent in Nigeria
Refusal to carry out Property Inspection
If you’re not being allowed access into the property, then you should be concerned as that may be a pointer to a compromise in the construction. Property inspection helps you properly analyze the property you’re about to purchase. It is always better to view the property physically as pictures or videos could be sometimes deceptive.
If the Property Has Been on the Market for Too Long
Why has the property remained in the market for so long? Are there underlying issues that turn away potential buyers in the past? These and many more are questions you should ask to avoid getting involved with a problematic property.
Read more on Property Inspection Checklist
What to Avoid in Real Estate?
There are also certain things to look out for in a problematic property so you can avoid them.
Physical problems
Physical internal and external problems in the house that need repairs are what you do not want to be dealing with in a new property investment. Some problems could be;
- Cracks in the wall which could be a sign of a faulty foundation
- The roof dripping water or showing signs of having done so in the past.
- Faulty plumbing work done in the house resulting in blocked or leaking pipes.
- Electrical connections that are not properly done could be a danger point in the property.
These problems are what you should look out for in a property inspection and avoid. You have to decide if you would want to spend money carrying out these repairs or if you would avoid buying the property in the first place.
Documentation
Properties that do not have the accurate or complete documents are a huge red flag to be avoided. A very big mistake that some investors make is treating documentation of a property with levity. It is so important that the services of a professional such as a lawyer is required in conducting a transaction.
Tips for First Time Investors
In real estate, different occasions arise where you have to apply discretion and knowledge gained from experience. As a first time investor, these tips will be of great benefit if you can apply them in your transactions.
Get Professional Advice
If you’re a first time investor, you most likely need the help of a professional to ensure you do not make costly mistakes. Professional advice will save you a whole lot of stress and money.
Have a Plan Before You Make Your Purchase.
You should have already decided the purpose of whatever property you’re planning to buy as this would guide you in your purchasing decision. You should also have a fallback plan if your initial expectations of the investment returns do not come as planned.
Always Carry Out Research Before Making Any Investments
The importance of research cannot be overemphasized. It is a very crucial factor in real estate investment. Ask as many questions you can ask because it’ll save you from future expenses and trouble. Look at the neighborhood; why is the owner selling the property? Are the documents complete?
Do Not Trust Without Reservations
Anybody could be a fraud which is why you have to be meticulous in carrying out real estate transactions. You can never be too sure, so take due diligence to investigate before committing your finances to any investment.
Read more on How to Protect Yourself From Real Estate Fraud in Nigeria
At the end of the day, it is important that you apply patience and instincts when trying to invest in real estate. Problematic properties could come up on different occasions but with the right application of all the necessary knowledge gained, you can avoid such situations.
MKH offers professional advice and consultations on making investments. We also have valuable properties that are well documented for and constructed to suit your taste. They are available for inspection at any time, all you have to do is contact us here for more information.