Buying Investment PropertyWhen buying investment property there are two real estate terms used to describe the current condition of a property, “As Is” and “As Completed.”

If you don’t know the difference between the two, it’s possible you’ll have a property that can’t be sold because a lender won’t finance the purchase.

A house is not a flip until it’s been sold to someone else, right?

When you’re buying an investment property that’s listed well below market and you determine that with a few thousand dollars you can make some basic repairs then turn around and sell it for a quick profit.

The property needs a new roof and quite a bit of cosmetic work before you sell, but you decide to keep your expenses down and leave the new roof to your buyer while you provide fresh paint both inside and out, new carpeting, and update the kitchen and bath, then sell the property “As Is.”

So what does buying an investment property “as-is” mean, and what should you be aware of as an investor?

As Is mean simply that: the property is being sold in its current condition.

Yes, the roof might need fixing but you’ve factored that into the price to let the buyer fix the roof on his dime. But that presents a problem: if the buyer intends to buy the property, fix the roof and hold it as a rental, a lender won’t place a loan on a property in such condition, effectively reducing your buyer pool to only those that can pay cash.

Understand that when you buy, or sell an investment property, the lender evaluates the property for permanent financing, the structure must be in a habitable condition.

That means the foundation is in good shape and the plumbing and electrical is in good order.

But if the roof leaks or the foundation is cracked, a lender will wait to finance the property until the required repairs are made.

New paint and flooring? No problem. Bad roof and faulty foundation? Big problem.

In such an instance, the lender financing your buyer’s purchase will base the loan approval on As Completed status, meaning a loan will be placed as long as the repairs have been completed and inspected.

Talk soon,
David Slabon