_{Presented by Astra Properties LLC}
Conducting Comprehensive Due Diligence to Minimize Risks in Your Investments
_{By Nicholas Burrus · 01/05/24
Thanks for tuning in to todays read! Read time is roughly 6 mins.}

Top of the morning 🌅 

Thanks for tuning in on this lovely Friday morning.

We hope the first week of the year has been solid, and that you haven’t broken your resolution yet 🫥 

The new year brings new challenges. That's why educating yourself is crucial to making the best business decisions!

This goes especially if you're investing in a new property.

What are some critical factors before buying a rental or a foreclosed asset?

That's what we're here to talk about today -

Factors to Consider Before Buying Your Next Project

^{Is it worth the investment?}

^{Probably, but let’s find out}

Knowing the essential factors to consider before buying your next rental property helps minimize risks and avoid stress. 

These factors are: 

Location-

Where is the property located? Are there supermarkets, hospitals, schools, or transportation hubs nearby? 

A great location will effect your current and future bottom line.

Check nearby places to figure out if the property has a great location. You can also figure out how progressive a site will be by checking future development plans.

Note: People pay more to live in the location they want

Current condition-

What is the age and shape of the property? Does it need extensive renovations or upgrades? We’re pretty against buying site unseen unless the deal is smoking. If the property requires extensive work, it might affect your ROI. 

Local rent rates-

Make sure to figure out the earning potential of a property before buying it. 

How? 

Check the local rent rates and see if it's worth getting the property.

Understanding market rent rates helps you adapt to changes while boosting your income for the long term. 

Legal and zoning regulations-

The last thing you want is legal complications after signing the deal!

Do your due diligence and check if the property complies with local legal and zoning regulations.

Learn about the landlord and tenant laws or rent control guidelines before buying a property (mainly if you’re buying our of state and are unfamiliar with that states laws)

Different cities have different regulations, so it's a must to check if the property complies with the local legal and zoning regulations. 

Recurring expenses-

Buying and maintaining a rental property comes with recurring expenses from:

• Routine maintenance

• Repairs

• Taxes

• Insurance

• Mortgage

Figure out how much these expenses will cost and develop a financing plan that fits your cash flow and investment goals.

Manage recurring expenses wisely and keep them down to maximize your income.

Appreciation potential-

Most properties grow in value over the years - depending on several factors, of course!

The goal here is to make a decent income while also owning an asset that grows in value over time.

How? 

• Monitor market trends to boost property value

• Check for infrastructure projects in nearby areas

• Analyze the area's economic stability 

• Investigate housing market indicators like foreclosure rates and supply and demand

Check previous market performance to get a good idea of a property's appreciation potential.

If a property increases in value over time, then it's worth investing your money into it. 

Is it a Good Idea to Buy a Foreclosed Property 🛖 

^{Are foreclosures worth the risk?}

Eyeing a foreclosed fixer-upper? 

Can’t blame you; foreclosures are often sold at bargain prices.

That's because a property is sold at a lower price once foreclosed to recover the lender's losses. 

But here's the thing: many foreclosed properties come with problems that need solving, so don't jump on the first deal offered to you. 

Say it with me: Do your due diligence! 

Conflict with Ex-Owners 👈️ 

Foreclosed properties are repossessed by the lender - usually a bank - because the owners cannot pay for them anymore. 

And often, the previous owners are bitter about losing their house.

They take their frustration on the house by ripping fixtures, removing appliances, and intentionally causing damage to the property. 

In many cases, the previous occupants leave their things because they've been locked out of the property, and it's up to the new owners to get rid of old furniture, trash, and other items.

And once the occupants leave the property for good, the house stays abandoned for years. 

Intentional damage, neglect, being abandoned for years, or being occupied by squatters will take their toll on the house's condition. 

You're buying the property as is - potential extra costs and all.

Property Condition

If ex-homeowners can no longer keep up with mortgage payments, they cannot afford the upkeep either. This is why most foreclosed houses are poorly maintained and damaged in places. Some of the many issues you'll find on foreclosed homes include:

• Outdated designs

• Bad plumbing

• Damaged flooring

• Mold

• Damaged walls

• Vandalism

• Criminal activity

Some foreclosed houses may have unfinished or poorly done "upgrades" that don't comply with local laws.

DIY repairs may have been done in the house because the owners couldn't pay for the maintenance, and these repairs aren't necessarily done right.

These are expensive to correct 💰️ 

If you're interested in a foreclosed property, do your best to walk through beforehand and if there’s no access available (some don’t allow walk throughs and are site unseen), do your best to at least survey the outside and peep through some windows to get an idea of what you’ll be dealing with.

Issues with the Purchase

You might think lenders are in a hurry to get foreclosed houses off their hands, but the increased bureaucracy and paperwork can slow down the buying process.

Apart from the complicated purchase process, some foreclosed homes could have:

• Additional liens

• Unpaid mortgages

• Back taxes

You probably won’t pay for the liens or back taxes, but these issues can complicate the purchase.

Work with an agent specializing in foreclosed properties for a smoother purchase.

Always make sure the title is clean before you purchase. This will ensure you can sell it easier down the line.

Foreclosed properties can be a great investment. They cost less, and there are great financing options to take advantage of. 

But you have to be flexible and never forget to check the finer details of the property before making a commitment.

💫 What Else is Poppin? 💫 

A Tesla Cybertruck crashed on a public road and caused minor injuries 😮 

^{It's the hi-tech pickup's first reported accident}

Tesla's newly launched electric pickup was reportedly involved in a 2-vehicle accident along Page Mill Road on Skyline Boulevard in Oakland, California. 

According to California Highway Patrol, the Corolla hit a dirt embankment and crashed into a Tesla Cybertruck as it tried to re-enter the roadway. 

The crash did little to damage the EV, but the Toyota Corolla's front had substantial damage. There were no indications that the Cybertruck was running in autonomous mode during the crash. 

The driver of the Cybertruck suffered "minor" injuries but declined medical transportation. The Cybertruck had two passengers aside from the driver.

No report of any injuries to the Corolla driver, reportedly a 17-year-old. 

Experts have long wondered what would happen if the 3.5-ton, stainless steel armored EV was involved in a crash. 

But Tesla CEO Elon Musk claims the Cybertruck is "safer per mile than other trucks" despite claims it has the acceleration of a Formula 1 car.

Catch the latest episode of the AstraCAST podcast!

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You can catch me and Marcos on YouTube, and Spotify! Catch up with us as we bring on guests from all parts of the industry covering everything from real estate, personal development, to growing a business through acquisitions, rentals, and renovations.

Don’t be shy, check us out here!

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