Should I buy a rental property that needs repairs?
What exactly does the home inspection reveal? Are they overall minor issues that can be fixed easily? Will the seller be willing to repair those few items? If not, are they relatively a simple fix that won’t cost too much? While a list of repairs may at times look daunting, a closer look may reveal that the main components of the home are in good working condition and minor wear and tear repairs are needed, ones that can easily be offset with the first month’s rent.
Are there major items on the home inspection? Work with your real estate agent to see if the seller will cover those items or offer a credit towards them. If not, make some basic calculations to determine if the property is still a good fit. For example, if you were to complete some high ticket repairs, is the initial investment worth it? How long will it take to offset those expenses with rent? Are you buying the property below fair market value?
Real estate is an investment that requires the occasional, well, investment. It has been a go to for many high profile investors over the years, however, setting realistic expectations is key. Remember, homes have many working parts and subject to repairs, especially as they age. Not every seller has had the time and money to invest back into a property. So, when looking for an investment, remember to calculate the cost and determine if a property will still be a good investment, even if repairs are needed.
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