You shouldn’t expect to do a deep dive and invest in market research each time you sign an offer. However, if you get an offer signed back by a seller, be ready to make the time to do your due diligence. Your due diligence period is a time when you can back out of the contract if something is not to your liking. Generally, this can be anywhere from 3-10 days.
However, it can be shorter or longer than that depending on what was agreed upon in the contract. During this period you should obviously hire inspectors to check out the home. Some inspectors will only do the general home but won’t inspect a pool or sewer line. Your standard inspector will generally cover HVAC, Electrical, Plumbing, and Roof.
This is known as the 4-point inspection and is a report your insurance may ask for before approving you for insurance. If it doesn’t come back clean, you should have the seller address the issues and have them fixed. I at times have had to hire an extra inspector to come to check the sewer line or the septic. It is critical to have these inspected as it can be costly when they need to be repaired.
This is also the time to do more market diligence and make sure you ran your income projections correctly. Although it is impossible to know with 100% accuracy how an investment will perform, the responsibility is yours to gather the best market intelligence you can get. The rest is up to GOD. However, GOD is not responsible for laziness or for “hoping” that the investment will do OK.
It is also quite important to try to get your home designer or decorator into the property during this period. They should be able to see things that your relator might have missed. To the untrained eye, a room might look inviting but your trusted decorator will see that in the morning sunlight the stains on the trims show up really badly.
If you can get a designer into your home and have them provide an estimate of how much funds you will need to set aside to get your place looking like a 5-star hotel, then you are golden. My first projects always ran over budget as my realtor did not see what my designer was able to see.
Once on the topic of home designers and decorators (they are not the same thing) they can be very pricey. It is best to shop around for one that has an investor mindset. I have had lots of success by hiring home stagers rather than decorators. My guess is that home stagers work on fix and flips all the time where they stage the home with furniture prior to taking pictures to post online. These fix and flippers are investors and their investment mindset rubs off on home stagers.
Home stagers also have the benefit as their primary concern is to make the place look good on Zillow and other platforms. This works to your benefit as you want your place to look snazzy on Airbnb!
Once you have some degree of confidence that your investment will provide you with positive cash flow and you have a better idea of how much funds you will need for furnishing your place, it’s time to make sure you have your funds ready to go!
