Step 1. Investigate the legal status of the land. Although the seller is responsible for complying with the laws relating to the sale or transfer of the real estate, buyers should also check the legal status of the property to avoid future complications, including legal proceedings.  Seek help from realtors in Washington to guide you through the process. 

To determine the legal status of a property, determine when the property was built or "created," and review local land use laws to ensure compliance with applicable laws. If the land was created before customary use laws and reciprocal local ordinances, the ground might be sanctioned or grandfathered to avoid violating them. This is usually fine if the legal description contains a number and name. However, a somewhat broader legal definition or tax conspiracies contained in a legal statement can be clear signs of fraud. We recommend contacting your local authority directly to determine if the property has a legal land registry.

Step 2. Permissions, past and future use. Prudent buyers should review the building permit history associated with the property. In many cases, it is possible to identify problems of incompatibility. To meet all deadlines, we recommend that buyers include appropriate due diligence provisions in the sales contract. Permits may not have a final clause that could deny a homeowner liability insurance. In addition, the buyer should check whether they can obtain planning permission to use the planned property. In a typical 3-bedroom dilapidated house, verify if it is possible to add a bedroom due to space constraints and local land laws.

Step 3. Check the support services. A prudent buyer should ensure there are no delayed agreements, service fees, or other unpaid utility charges on the property being offered for sale. A good service account usually provides that everything is in order. In rare cases, some parts may be serviced by unlicensed public services.

Step 4. Advanced Property Insurance/Research. Standard liability insurance is usually specified in the sales contract. However, this type of coverage has many limitations and exclusions. For example, standard title insurance does not cover adverse claims, violations, or non-compliance with statutory rights and state laws. A buyer should get comprehensive property insurance with fewer limitations and exclusions. However, extended title insurance is typically 25-30% more expensive than standard title insurance, costs thousands of dollars, and requires a delayed investigation. However, this research is intended to help identify adverse claims, violations, and regulatory rights. If the four corners of the property cannot be determined and the boundary of the property is not reasonably justified, it is usually best to proceed with the survey.

Step 5. Disclosure statement. Current legislation requires the seller to provide the buyer with disclosures about residential real estate. The buyer does not waive any disclosure statement, even if it is not legally binding. Buyers can learn more about real estate and get valuable information that will help them objectively evaluate real estate. Each party may agree to include the declaration as part of the sales contract.

Step 6. Home inspection. Of course, a prudent buyer should inspect the property with a competent and experienced home inspector. However, the inspection excludes the detection of hidden defects or items that are not readily visible. Therefore, the test does not provide a 100% result. In this case, the buyer is advised to request a more specific inspector for issues of concern. 

Step 7. Spend the night. It may sound crazy, but savvy buyers can stay the night or request a stay of 24 hours or more to "experience" the property. The noise of trains and airplanes, unpleasant odors from a malfunctioning home ventilation system, or active agricultural or illegal activity nearby may go unnoticed during a short visit, but a more extended stay will make them readily apparent. The above list is by no means exhaustive. Furthermore, the above is not legal advice and is provided for general information.

A profitable investment in real estate

Home or condo owners must get a basic understanding of property management when considering an investment property.  When making a purchase, consider what maintenance or upgrades in the long term will be required. Examine if these upgrades will change the property's value or the rental income.  If the property's value is expected to increase over time, making upgrades can add even more value. 

If you plan to rent the property, you should update regularly and ask for a rental price that matches the upgrades.  In any case, rents and upgrades must be within economically reasonable limits if we want the real estate to be profitable. This requires at least a minimal level of entrepreneurial thinking.  Performing a cost-benefit analysis is helpful when making all upgrade and rental price decisions. 

When buying a property, you should only use some of your assets, including down payments and budget for renovations. Without any risk distribution, the investor faces the potential of significant economic losses, which in the worst case, may end in personal bankruptcy. 

When buying a home, in addition to the purchase price, other costs should be remembered when planning to finance. For example, 3 to 6 percent of the purchase price goes to the real estate agent as commission.  In addition, the necessary fees for the notary, real estate registration, and taxes on the purchase of the real estate must be paid. These costs are crucial for financing and should also be deducted from the return on investment. 

Anyone buying an apartment may also be obliged to the condominium association.  Even if it's an investment that doesn't necessarily increase the value of their specific property, HOA fees, and special assessments are required. Sometimes, it is worth agreeing on minor cosmetic repairs in common areas, such as the stairwell, which make for a more pleasant environment for everyone. 

Unfortunately, the saying "the unexpected often happens" fits in the real estate market. There are times when issues appear after a property is purchased.  If the defect appears after signing the contract of sale or if there is damage that is not covered by insurance, it can cost a lot of money to fix. Therefore, in such cases, you should have more significant financial reserves, especially in the case of real estate as a capital investment.

Regardless of how the purchase and maintenance of real estate are financed as an investment, it should always be remembered that such an investment is a long-term commitment. Buying real estate as an investment only makes sense in the long term since its value grows over time. Anyone who asks, "Is it worth investing in real estate?" is primarily interested in the expected return. However, there is no unequivocal answer to this question since no one can predict what the future will bring. 

There are different methods of calculating the potential profitability of real estate. The simplest way is the annual rental income - annual rental cost divided by the mortgage value.  This calculation is simple.  Some factors are not considered here, such as additional acquisition costs, non-refundable administration, maintenance costs, and interest and tax charges. However, some items can never be definitively calculated for the future.  The actual increase in the property's value also depends on circumstances beyond our control, so it cannot be estimated in advance. However, if you follow the above tips and buy a property in the right location, you have made a high-yielding investment that will pay off financially.