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Investment property RED FLAGS| 10 things to look out for.

Colorado real estate can be tricky.

When buying an investment property in Denver, Colorado a buyer should be aware and looking for certain signs when viewing potential properties.Some examples are the age of the roof, furnace and hot water heater. The buyer should  be looking to identify red flags when viewing a house. Below are 10 red flags to look out for if you are a real estate investor.

1. Foundation/structural problems.

Correcting foundation problems can be extremely expensive. When viewing a house it is pretty easy to see cracks in an unfinished basement. Minor cracking may be a sign of settling but large cracks can indicate a structural problem with the foundation.

If the house doesn't have a basement or has a finished basement, look at the door frames throughout the house. If the door frames don't seem to be square or the doors have difficulty closing, there could be problem the homes structure.

The best guess is to hire a structural engineer to inspect the house and to determine if it has foundation or structural problems.

2.  Pest/Insect problems.

In Denver, Colorado there are certain pests/insects buyers need to look out for. It is advisable to have a pest inspection, because a pest or insect problem can cost a lot of money to correct.

3. Random fresh paint.

A buyer should be on the lookout and question if he sees that a home owner has painted one wall or a small area on the ceiling to conceal previous damage. This should be a red flag. 

4. Amateur workmanship and repairs.

Buyers need to look out for amateur workmanship when thinking of buying a house. 

When looking at a flipped property look out for amateur workmanship. Some "flippers" don't have the necessary qualifications to do quality construction. Saving time and cost is very important  for "flippers" and they will cut corners to save time and money.

When viewing homes look at plumbing, carpentry, and electrical work for amateur workmanship. Always screen for quality general contractors to make sure they will do the work properly.

5. Odors

Pleasant odors and foul odors can be red flags. Home owners may try to conceal odors by placing plug in air fresheners in every outlet and candles lit in every room. Buyers should also be aware of windows opened in the home during the middle of winter, this should raise a red flag.

6. Poor neighborhood condition.

Location, location. location When buying a home, you are also purchasing a neighborhood. A neighborhood that has an overall poor condition is a red flag. 

Buyers should be aware of boarded up properties and a large amount of vacant properties. A home purchased in a high crime area can be a costly mistake for future resale.

7. Stains on walls/ or ceiling.

If you observe stains on walls or the ceiling, this should be a red flag. Stains might be caused from a leak in the roof, ice damming or plumbing issues. It is important to find out what has caused the staining.

8. Electrical system.

The age of the  house can determine possible issues with the electrical system. Older homes can have older electrical panels with fuses. Some older homes may still have knob and tube wiring, which can cause a significant problem. 

Turning on light switches, checking for flickering lights and checking outlets are a good way to determine if the electrical seems to be working properly. A home inspection should be done. Inspectors will inspect the electrical panel and will test outlets to make sure the electrical systems are not a safety concern.

9. Poor drainage/ grading.

Most water problems are related to poor drainage and grading. A sure sign of poor drainage is pooling water. Other signs can be overflowing gutters, migrating mulch in flower beds, water stains on basement walls and cracking in the foundation.

It is important that the overall grading is sloping away from the houses foundation and that the water is being run-off away from the foundation.

The most inexpensive way to keep water away from a houses foundation is by installing gutter downspout extensions.

10. Mold.

Home inspections can uncover mold problems in a house. The most common areas for mold are basements and attics. There are companies that can perform mold tests to determine if a house has mold or not.


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