As a first-time investor, I was very cautious. On my first very serious offer, I asked my agent to include certain conditions, known as contingencies, in the offer, so I would be protected against unseen problems, should the seller accept my proposal. These contingencies had to be met to my satisfaction before I would finalize the purchase.
My conditions were:
- My attorney would review and approve the contract
- Professional building inspector would examine the overall condition of the property and give me a report of his findings
- Seller would give me access to the building’s financial records for the previous two years.
After I was satisfied with the inspection and the seller provided his income tax records for the prior two years along with copies of his electric and gas bills (because he included those utilities with the rent).
I had my attorney check it out.
My attorney approved the boilerplate contract and I was on the road to becoming a mogul.
If I did not include those contingencies, I would have been blindsided with the fact that the electrical system needed an overhaul and the rents were way below market rates.
So always do due diligence and use great contracts that protect you as a buyer when investing in real estate.
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