What Are Some Red Flags About a Property?

When you flip through records about the property's history, take into consideration the following red flags:

• Frequent change of owners: If a property has experienced ownership change almost every few years, you should find out why. It could be that a property or neighborhood issue prevented the property from being a viable rental. Alternatively, it could simply be that the housing price is appreciating so fast that owners just want to profit from the price growth. Or perhaps the various owners simply wanted to cash out, retire, or buy another property. Unfortunately, the two most common reasons why people sell real estate are divorce and death. You can search court records, found online in some states, to see if you can find out the story behind a property. Some states publish historical sale prices while others do not. Real estate brokers usually store past deal prices and terms in their listing systems.

• Unauthorized work or additions: If you think additions, structural work, electrical upgrades, major plumbing work, or an overhaul of heating, ventilation, or air-conditioning (HVAC) may have happened on a specific property, you should dig up the building permit history. You may be surprised by the amount of work done without receiving the required permits. Projects without permits can put you in a precarious position going forward. You will not be able to determine if the work met codes and standards or if the work may pose certain risks of property damage or personal injury. Therefore, you may want to cross the property off your list if it has had additions without a permit.

• Prior history of crime or meth labs: You may be able to unfurl a property's dark history through online searches, and learn if it was the site of a crime or a former meth lab. Some states are also starting to set up databases to record meth lab sites. Properties that were used as meth labs require extensive rectification and would not be a good fit for small proprietors. You can also find other crime information by looking up prior property owners, residents, or the address. You will want to know this information because even if the property is unblemished, its reputation may deter decent renters.

• Geographic and environmental issues: Flood zones, wetlands, slide zones, earthquake fault lines, and environmental hazards are serious issues. Most official maps already list out these issues and sellers are often required by law to disclose them. It's recommended to err on the side of caution and get all the facts, since floods and landslides may not strictly follow the prospective boundary. Avoid property near hazardous zones.