Landmines

• Contamination or anything that really would scare a potential buyer or a potential tenant from coming. Anything that has the potential to really cost you in terms of your investment or to add headaches to your investment. So something like environmental contamination, which for residential investments usually are not the case, but it could, if it was located, say, near some sort of a manufacturing or industrial park where there was some chemical use prior and even years ago, and it has leached into the groundwater and now that’s affecting the waters in the community. Well, that can be a huge, huge deal. So contamination or potential for contamination is one potential huge landmine.
• If you don’t have a clear way of getting the title after you purchase the asset, you’re going to have a lot of headaches. So you want to make sure that the title to the asset is absolutely clean before you commit to actually buying a property.
• And then a major landmine that is common in a lot of investments is what’s called major deferred maintenance and sometimes they’re hidden.
• So one example of that would be a fix and flip property that appears to only need exterior or cosmetic fixes.

But in reality, there’s some significant damage to the foundation or there is some major damage from termites that you can’t really see from a walk through that you would only be able to see with a very detailed property assessment done by a professional. So those kinds are hidden in major things because it requires a lot of money to replace if you have issues with the foundation, termites, the roof, things that cost significant amounts to fix, you want to make sure you’re fully comfortable with the status of those items before you get into an investment.

• When you look at investing, you don’t want to just look at the property. You don’t want to just look at the market. You have to see what’s going on in that area and look for any major things that are coming online, like a chili factory that could potentially impact the attractiveness of your investment when you’re trying to sell it.