{"id":99940,"date":"2018-06-16T11:00:52","date_gmt":"2018-06-16T17:00:52","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=99940"},"modified":"2021-03-16T13:57:06","modified_gmt":"2021-03-16T19:57:06","slug":"5-signs-shouldnt-buy-house","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/5-signs-shouldnt-buy-house","title":{"rendered":"5 Signs You Shouldn\u2019t Buy That House"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Today\u2019s <a href=\"\/renewsblog\/why-i-turned-down-a-chance-to-be-a-star-on-hgtv\/\" target=\"_blank\">TV shows<\/a> love showing the most dramatic rebuilds and remodels of distressed houses all over the map, but are there some you just shouldn\u2019t buy?<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><a href=\"\/renewsblog\/2015\/01\/31\/ultimate-beginners-guide-real-estate-wholesaling-2\/\" target=\"_blank\">Wholesaling real estate<\/a>, <a href=\"\/renewsblog\/2014\/01\/07\/flipping-houses\/\" target=\"_blank\">fixing and flipping houses<\/a>, and acquiring, remodeling, and leasing rentals can all be great ways to make money. Still, many real estate investors may be getting in far over their heads by buying properties they shouldn\u2019t. Where do you draw the line? What warning signs should you be looking out for when evaluating potential house deals? <\/span><\/p>\n<h2>1. Big Ticket Repair Items<\/h2>\n<p><span style=\"font-weight: 400;\">Repair issues that are expensive and time-consuming can be very problematic. They can come with many hidden surprises and lead to lengthy renovation times and extra risk. When you do the real math, these issues can often outweigh any perceived or advertised &#8220;discounts.&#8221;<\/span><\/p>\n<p><em><strong>Related:<\/strong> <a href=\"\/renewsblog\/rental-property-red-flags\" target=\"_blank\">10 Rental Property Red Flags You Should Never Ignore<\/a><\/em><\/p>\n<p><span style=\"font-weight: 400;\">This can include items such as:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Foundation cracks and leaks<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Structural damage<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Roof replacements<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Flood and mold damage<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Chinese drywall<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Septic tank leaks<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Rewiring needs<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Plumbing problems<\/span><\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-74247\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2012\/07\/foundation-problems1.jpg\" alt=\"foundation-problems\" width=\"702\" height=\"336\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2012\/07\/foundation-problems1.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2012\/07\/foundation-problems1-300x144.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<h2>2. Poor Local Economic Fundamentals<\/h2>\n<p><span style=\"font-weight: 400;\">Sometimes it\u2019s not the property itself, but the local area that is a bad investment at a given time. This can even apply to what have been some pretty trendy and expensive destinations in the past.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Red flags here include:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">One major employer or industry in immediate location<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">High unemployment rates<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Numerous store vacancies and boarded up commercial buildings<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Lack of job growth and future proofed jobs<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">High crime rates<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Limited buyer and renter pools (i.e. in rural areas and small towns)<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Declining populations<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">This last one is particularly important today. The new remote workforce and flee to affordability and away from high taxes is causing some major population shifts. Recent polls show as many as 50% of Bay Area California residents plan to move out in the next few years. Similar trends can be found in other parts of Southern California, too. <\/span><\/p>\n<h2>3. Doesn\u2019t Hit Your Numbers<\/h2>\n<p><span style=\"font-weight: 400;\">If the numbers don\u2019t work, the deal doesn\u2019t work. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Recently, many investors have been caught up in manufactured inventory shortages and bidding wars. They throw out their numbers and get involved in transactions they shouldn\u2019t. That can be very costly and risky.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">On that same note, there are others who have also been stuck on numbers that just might not be there anymore. They\u2019ve tried to copy rules of thumb and formulas they saw online that just aren\u2019t going to apply in their area in this phase of the market. It\u2019s not 2004 or 2008 anymore. Don\u2019t speculate, but don\u2019t sit idle because you are trying to find something that doesn\u2019t exist either. One hundred percent returns on no deals is still zero.<\/span><\/p>\n<p><em><strong>Related:<\/strong> <a href=\"\/renewsblog\/2016\/07\/22\/exit-bad-deal\/\" target=\"_blank\">How to Exit a Real Estate Deal Gone Bad<\/a><\/em><\/p>\n<h2>4. Too Many Vacancies<\/h2>\n<p><span style=\"font-weight: 400;\">Too many local homes that are vacant and too many for sale and rent signs lingering can be a bad sign. It suggests low demand. Low demand leads to landlords cutting prices and offering concessions, which ultimately leads to lower asset prices. That\u2019s typically not the phase of the market you want to be acquiring in. Check out other destinations that are growing instead.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-96952\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2018\/02\/brooklyn.jpg\" alt=\"\" width=\"702\" height=\"344\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2018\/02\/brooklyn.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2018\/02\/brooklyn-300x147.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<h2>5. Too Good to Be True<\/h2>\n<p><span style=\"font-weight: 400;\">Often, if it seems too good to be true, it probably is. Not always, but often. If the pictures look amazing and the price is too cheap, there is a reason. Maybe it is a scam, or maybe there is something changing in the neighborhood or underlying repairs. Providing you know what the issues are it can still be a deal. Just make sure you conduct proper <a href=\"\/renewsblog\/performing-due-diligence-multifamily-properties-checklist\/\" target=\"_blank\">due diligence<\/a> and know what you are buying. <\/span><\/p>\n<h2>Summary<\/h2>\n<p><span style=\"font-weight: 400;\">There are still lots of opportunities out there to buy homes and other real estate investments. Overall, analysts still seem bullish on the market. But getting stuck with a bad buy can really take the profit out of everything else you are doing. It doesn\u2019t take many mistakes to really get expensive. Get out there and take action, but watch for these signs when evaluating deals.<\/span><\/p>\n<p><a href=\"https:\/\/www.biggerpockets.com\/real-estate-investment-calculator?utm_source=renewsblog\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-91220\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/08\/blog_ads-02.jpg\" alt=\"\" width=\"700\" height=\"85\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/08\/blog_ads-02.jpg 700w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2017\/08\/blog_ads-02-300x36.jpg 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\" \/><\/a><\/p>\n<p><em>Any other red flags you&#8217;d add to this list?<\/em><\/p>\n<p><strong>Comment below!<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Many real estate investors may be getting in far over their heads by buying properties they shouldn\u2019t. Where do you draw the line? What warning signs should you be looking out for when evaluating potential house deals?<\/p>\n","protected":false},"author":12140,"featured_media":95315,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4252],"tags":[6638,6429,1370,3972],"class_list":["post-99940","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-deal-analysis","tag-bad-investment","tag-investing-in-single-families","tag-single-family-homes","tag-single-family-rentals"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/99940","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/12140"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=99940"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/99940\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/95315"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=99940"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=99940"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=99940"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}