Posts Tagged ‘purchase agreement’

Don’t skip due diligence before purchasing

Regular readers know that I am bullish on investment property. Prices and interest rates are low, supply is flush and those variables have created an incredible market for buyers.

But before you go running out with earnest money deposit on your neighborhood duplex, be careful to plug in some other very important numbers to evaluate the risk. Without careful consideration, unexpected expenses and tricky economic trends can drain your positive cash flow.

Before you sign that purchase agreement, do some simple research in your local market and plug those numbers into your equation to make sure your investment is sound.

Vacancy rates vary wildly from region to region. Overall, vacancy rates are favorable. Know what the rate is in your town and plug it in when calculating your potential income.

Consumer goods costs are currently low, though inflation is a real fear, so plug in cost of replacement appliances and building repairs. Labor costs are also at an all time low, which is great when you need to call in contractors.