Do Your Due Diligence before Purchasing

You think you found the property you are going to make some money on but once you close on a property, responsibility for this asset becomes all yours, good and bad. In order to be a successful real estate investor you need to make sure you don't make any mistakes. If you do, it will be small one and easily forgotten when you cash your first check.

Below is a list of items you should be checking before you make an offer.

Due Diligence on Your First Deal

Wynwood Duplex Kitchen before Rehab

• Inspection
  • Upon Entering the property look for visual clues that indicate the current condition of the house.
  • Look for things that should be there but are not.
    • A bedroom without a closest. HUD would not consider this a bedroom.
  • Look for things that are there but shouldn't be.
    • A window inside the house that isn't an exterior window. Could be a porch that was closed in years ago.
  • Looks for points of failure
    • Connections: bathroom fixtures, underneath sinks....
    • Intersections: roof, ceilings and walls, walls and windows, floors and walls, water stains...
    • Windows and Doors: water leaks, holes, broken or cracked pains of glass, widows and doors open and close properly...
  • Black Mold - Indication of moisture buildup.
  • Termites - Big problems for us in Florida and Puerto Rico.
  • Asbestos - Probably present in older homes. Need to check for this.
  • Environmental Hazards - Underground oil tanks for heating, septic systems. Check the property history.
• Comparables or Appraisal - Before purchasing the property see if you can get your hands on:
  • Recent property appraisal less than 90 days old. Ask the seller if he/she has a copy.
    Dania Beach Duplex Rehab
  • Try to determine the After Repair Value ARV by getting three property comparables within a 1 mile radius and less than 90 days old.
  • Use the Maximum Allowable Offer MAO Calculation to help determine your purchase price.
• Title Search - Make sure you use a Title Company that understands how investors think and work. Every Real Estate Investment Club can recommend one. You assume Tile companies know what they are doing but I have gotten burned many times due to Title Company mistakes. Make sure they check for:
  • Open Permits - This has caused us more problems when we go to SELL an asset in our portfolio. It is usually the BUYERS Title company that finds the mistake and causes delays with the closing. MAKE sure they check for Open Permits!
  • Liens and Violations - Make sure they check for pet violations (Pit Bull), water, city and county liens. Check:
    • The City where the property is located: City of Miami, etc.
    • The County: Dade, Broward, etc.
• Taxes - Check to see if back taxes are owed. Usually the Seller pays the back taxes but it is good to know while you are negotiating terms and price before you make an offer.
  • Most tax records will indicate if the structure is legal or not.
    • If you see on the tax rolls the structure is listed as a 2 bedrooms and 1 bathroom and on the MLS it is listed as a 3 bedrooms and 2 bathrooms there maybe a problem with the investment property as being legal or not.
• History - Most counties will have a history of the property since it was built. It will contain information about the property that can be used to determine what has been done legally with permits, liens, violations, former owners, etc.
  • City of Miami – Micro Film Department, 4th Floor.
• Zoning - You must know the current zoning for the individual parcel of land and its existing structure. You need to know what is the permitted use and current usage. Knowing this information can help you with your rehabbing plans and exit strategy.
• Survey - You may want to order a survey before purchasing to see if the investment property has any encroachment issues.

These are some of the items we look at before making any decision to BUY. As you gain experience a lot of these items will become second nature and you will be able to apply this knowledge to tweak your success as a real estate investor.

Do you have any tactics you apply before you purchase a property? We would love to hear from you. Write your comments in the comment field below.

Related Links, Tips, Blog Postings, Presentations or Articles:

• Miami-Dade Municipal City Codes web page.
• Florida's Public Housing Authority PHA Contact Data web page.
• Real Estate Tip: Make sure you have the mail forwarded to your business address after you purchase a new investment property....Why?
• Hash and Profile Plus Tags
  • #MAO #HUD #ARV
  • +MAO +HUD +ARV

Written by +Bob Burns.

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Bringing It to the Beach Baby! +Real Estate Investor about.me/RobertKBurns Telephone #: 305-586-5280 email: sec8@planocho.com

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Homestead Housing Authority Miami-Dade County Florida New Section 8 Offices

Homestead no longer Strawberry Fields!

The Homestead Housing Authority in Miami-Dade County Florida has undergone some major changes since the real estate market began heating up several years ago. The City of Homestead enjoyed a good 10 years of expansion. Work force housing communities began springing up where strawberry fields, nurseries, orchards and farm land once occupied a majority of the acreage now developed. Major retailers like Wal-Mart, Nike and Home Depot, discovered that Homestead was the last stop for travelers and tourists before they entered the Florida Keys.

Homestead Housing Authority HHA Building

I discovered the Homestead Housing Authority back in 1998 when it was just a small office. I found the agency was very willing to work with Landlords and Real Estate Investors by making the Section 8 processing cycle very easy for owners and tenants. What I didn't find was a lot of investors or Land Lords using Section 8 or Plan Ocho as an additional marketing channel for finding tenants to occupy their investment properties in South Miami-Dade.

That was Then, This is NOW!

The Homestead Housing Authority has just completed a new building and road modifications to their facilities. HHA and the rest of Homestead has grown and caught up with the rest of Miami-Dade county.

New Section 8 facilities for Homestead, Florida

During the recent real estate bust, investors have picked up bargin properties in Southern Dade County. If you are a Landlord or a property owner looking for tenants, the Homestead Housing Authority HHA is one source for potential tenants in Southern Miami-Dade County.

Related Links, Blog Postings, Presentations or Articles:

• Blowout Properties Blog
• Section 8 Miami Blog

Written by Blog posting Author +Bob Burns.

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Bring It Baby! Real Estate Investor about.me/RobertKBurns Telephone #: 305-586-5280 email: sec8@planocho.com

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Secure Your property for before Rehabbing!

After completing several property rehabs in Miami-Dade County, Florida, I wanted to try something out of the county but still in Florida. My parents lived in Sarasota, Florida so I thought this would be a nice place to start. Distance would be an issue but my father was down for the winter and he could check up on the progress being made on the individual properties. Also, my Dad is an electrical contractor which brings many rehab benefits but that is a future REIC posting.

I found a duplex FOR SALE fairly quickly on Debbie Street, Sarasota due to the advantage of attending Sarasota REIA group meetings on Florida's Gulf Coast. Other than the distance, four hour drive, I felt this would be like any other rehab.

I decided to start in February with a two week property visit. Well during that time, several problems arose that I didn't experience before, like:

• Most of the properties were on well water. Hard on the pipes, fixtures and tasted awful. Our duplex had city water service which was a blessing but caused me a problem I had to resolve.
• Septic Tanks! No county sewer systems had been installed. The drain field was the front lawn and it was clogged.
• Clothes Washer waste water line emptied onto the backyard lawn.
• Pine trees over fifty high. Pine needles build up on the roof and lawn.
• Gravel driveway that the neighbors thought they could use to park their cars.
• Drug addicts lived about 50 yards away in an apartment.
• On and On and On....

But the one problem that cost me the most in time and money was the city water lines.

Apparently it was very expensive to get connected to Sarasota's water system due to high impact fees. Impact fees are the city's way to tax you for hooking up to the water system network. You have to pay for the following:

• Impact fees
• Installation fee for digging up the street and installing the water meters.
• Hire a plumber to run lines from the city's water meters to the duplex's water system.
• Had to pay twice since it was two separate water meters, one for each unit of the duplex.

Luckily, my duplex already had these meters installed by a previous owner. The problem was the neighbors knew this and thought they could help themselves to the city water from our duplex. They would go to our outside water fixture and fill their 5 gallon water containers.

By the end of the month, I had a very large water bill which I couldn't figure out why? My rehab contractor said he never used too much water. I thought I had a water line leak from the meter to the duplex.

One day in July, my rehab contractor said he saw one of the neighbors filling up their containers and told me about it. I was flabbergasted but realized that this was going to be an ongoing problem!

Below is picture containing the anti-theft water system parts and installation video.....

Related Links, Blog Postings, Presentations or Articles:

• Section 8 Inspection Checklist
• Sarasota REIA on Facebook
• Sarasota Real Estate Investor Association on Twitter

Written by +Bob Burns.

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Life is a Beach. Go Find Yours! Real Estate Investor about.me/RobertKBurns Telephone #: 305-586-5280 email: sec8@planocho.com

Our Internet Footprint: