Real Estate AnalysisWhen Should You Walk Away From a Real Estate Deal? by Charles Mburugu April 20, 2020April 20, 2020 by Charles Mburugu April 20, 2020April 20, 2020Walking away from a seemingly good deal is something many real estate investors find very difficult. When you’ve found the investment property of your dreams and are getting ready to close, letting go can be tough. However, when something goes wrong during the buying process, walking away might be the best decision you will ever make. Moving forward with the real estate deal will only cause you lots of stress and frustration. You may even lose a ton of money!So, how do you know when to walk away from a real estate deal? Here are 5 situations when you should tell a seller goodbye and look for investment property elsewhere:The Home Inspection Uncovers Major IssuesBefore making an offer on investment property, you need to hire a professional home inspector to check the state of the home. This inspection report will give you information about the property’s plumbing, foundation, electrical wiring, and structure. Conducting a home inspection is crucial because it will show you what areas of the investment property need repairs or renovation.Some home inspections only reveal minor issues that you can fix without spending too much money. This could be problems like stained wooden floors, peeled paint, broken sockets, or outdated fixtures.When should you walk away from a real estate deal? When the inspection uncovers major problems like faulty wiring, defective heating, unstable foundation, severe mold issues, or high radon levels.The Title Search Uncovers Unexpected IssuesA title search is a process of perusing past tax records, deeds, and other financial transactions connected to a particular piece of real estate. The main purpose of a title search is to ascertain that the individual selling the property is the actual owner and that the property doesn’t have any encumbrances or liens that would complicate the transfer of the title. You can conduct a title search yourself by checking online records or visiting the county office where the investment property for sale is located. However, it is recommended that you hire a title search company to do the work for you.Consider walking away from the real estate deal when a title search reveals the following issues:Uninformed or unfamiliar heirs – If the original owner of the real estate property has passed on, then you are probably buying from one of the heirs. If any of the other heirs have not been notified of the sale, then you are likely to face legal problems in the future.Liens on the property – Types of lien include tax liens, mechanic’s liens, attorney’s liens, and judgment liens. If the seller is not ready to pay off the liens before closing, walk away.Disputed boundaries – Even when boundary disputes involve small pieces of land, resolving them can be very time-consuming and frustrating.Unlawful deeds – This is a common problem that emerges during a title search. For example, the deed might have belonged to an undocumented migrant or someone that lied about their marital status. Such deed problems can create issues for you ahead.Related: Learn How to Do a Title Search in 5 StepsA Real Estate Investment Analysis Reveals Low Profitability Every investor should learn how to find real estate deals and how to analyze real estate deals. One of the best tools for real estate deal analysis is Mashvisor. You can easily find or add any investment property to this platform and analyze it. Learn how to do that here.Next, you’ll need to analyze the neighborhood where the investment property for sale is located. Mashvisor’s heat map will show you the areas with the highest and lowest listing prices, good cash on cash return, and good Airbnb occupancy rate. Once you’ve compared locations and ensured that the neighborhood has a high rate of return, you can then use Mashvisor’s real estate investment calculator to check for details such as:Optimal rental strategyTraditional and Airbnb real estate compsTraditional and Airbnb rental incomeTraditional and Airbnb rental cash on cash returnTraditional and Airbnb cap rateTraditional and Airbnb occupancy rateMonthly expensesCash flowMashvisor’s Real Estate Investment Calculator Sign Up for MashvisorAs an investor, you should only go for positive cash flow properties with a good return on investment. If the investment property deal finder reveals that a house will generate negative cash flow, walk away quickly.Related: How to Find the Best Real Estate DealThe Deed Restriction Is Too BurdensomeAlso known as a restrictive covenant, a deed restriction is a statement that places certain limitations on how a property can be used. Deed restrictions apply to all future buyers of the property. Changing them usually takes a lot of time and effort, as well as huge legal expenses.Before you make an offer on a home, be sure to ask for a copy of the deed of restrictions. Go through it slowly and understand what you are dealing with. A deed restriction might forbid things such as:Increasing the number of bedroomsChanging the color of your rental propertyKeeping certain breeds of petsAdding structures such as pools, workshops or garagesRemoving treesBuilding fencesIf you find a deed restriction too burdensome, walk away from the real estate deal and don’t look back.Need to walk away from a deal? Schedule a demo now to learn more about how Mashvisor can help you find profitable investment properties in minutes.Homeowners Insurance Is Too HighWhen you buy an investment property, you will be required to pay homeowners insurance to cover the house, as well as the people living in it. Before closing on a rental property, shop around and find out what you are likely to be charged for homeowners insurance. The online agent or app will calculate a quote based on the following factors:Where the investment property is locatedWhen it was builtThe square footageThe type of constructionFoundation typeType of air-conditioning or heating systemsIf the investment property is located in a high-risk area or has features that would be considered liabilities, the insurance is likely to be overpriced. This could be your cue that this is a bad real estate deal that you should walk away from.ConclusionThe investment property buying process itself is stressful and time-consuming. You don’t want to continue dealing with other problems after closing the real estate deal. Always look out for red flags and walk away when you sense you are not getting value for your money.Related: What Is a Good Real Estate Deal? Start Your Investment Property Search! START FREE TRIAL Cash FlowHome InspectionInsuranceInvestment CalculatorInvestment Property Analysis 0FacebookTwitterGoogle +PinterestLinkedin Charles MburuguCharles Mburugu is a HubSpot-certified content writer/marketer for B2B, B2C and SaaS companies. He loves writing on topics that help real estate investors and agents make better choices. Previous Post Is an Airbnb Investment a Good Idea? How Can You Be Sure? Next Post A Guide to Virtual Open Houses for Real Estate Agents Related Posts How to Find Investment Properties with Heatmap Analysis Figure Out How Much Airbnb Rental Income You Can Expect With Our Calculator What Is the Importance of Rental Potential Calculator in Real Estate Investments? 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