Are you looking to invest in real estate? If so here are a few things you need to consider. Let’s assume you have found a great investment property that fits your real estate investment goals and now you are ready to take the next step and submit an offer!
The process for buying an investment property is much different than buying a personal home. When you buy a home you are buying a physical property and land but when you buy an investment property you are also buying rental income and with that comes tenants, by-laws, zoning, fire code, health concerns, safety issues, etc, etc.
When submitting your offer it MUST have the appropriate clauses and conditions to protect you and address many of the factors that were mentioned above.
Your offer should request that all tenants you assume fill out and sign a “tenant acknowledgement” form that will confirm the following…
Last months rent paid, and when
Date of last rent increase
If there are any on going LTB disputes
What utilities are paid by the tenant
Who owns the appliances in the rental unit
Be sure to get confirmation of all equipment and chattels in your offer.
Your offer should include a clause requesting that the seller provide a letter of compliance from the fire department confirming that the property meets code.
Request that the seller provides proof that the property meets zoning bi-laws and that all units are legal or legal non conforming. You should also confirm that there are no outstanding work orders on the building.
Your offer should also be conditional upon receiving the following items…
All inspections and reports in owners possession
Copy of the insurance policy
2 years financial statements
2 years utility bills
All existing contracts, warranties, and invoices for capital expenses
You will want to include a clause that allows you to get a full property inspection report from a professional.
You will want to make sure that you can obtain satisfactory insurance on the building as it is becoming more and more difficult to find a fair quote. Insurance companies are also become more strict with requirements.
You may want to make the offer conditional upon finding suitable financing. If you are buy a property with 5 or more units you will want to extend the conditional period as it may take 4 to 6 weeks longer.
On larger building (6 or more units) You may want to request the seller provide any environmental reports in his possession and make the offer conditional upon obtaining a report that is satisfactory to you.
This is just a few things that you may want to consider when presenting an offer. If you are looking to create financial freedom through real estate investing I would recommend working with an experienced real estate coach that can help you navigate the many challenges that come with building a real estate investment business.
Until next time always remember " The More You C.A.R.E. The More You Earn"
Your real estate based wealth coach,
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