Thank you to BiggerPockets for this article.
When you ask what the most important factor is when buying a piece of real estate, whether it is a primary residence, a second home, or an investment property, their response will often be the old adage: “location, location, location.” It’s a well-known, trusted rule that emphasizes the importance of choosing the right location when buying a property. A property in a good location will usually come with a higher property value, higher appreciation rate, and will offer a better quality of life.
Who Said It First?
When putting this article together, I was hoping to go down the rabbit hole and uncover an interesting backstory on the origin of this famous buying tip, but I was surprised to learn that nobody knows for sure where the phrase originally came from.
Some journalists have reported that Lord Harold Samuel, a real estate tycoon from Britain, was the one to first use the phrase. But that was debunked by The New York Times when the newspaper found the phrase first used in a real estate classified ad in the Chicago Tribune in 1926.
Regardless of the origin of the expression, it has been and always will be one of the most important considerations when buying property.
Factors to Consider
There are a handful of factors to consider when it comes to picking a property in the right location. These include:
- Proximity to work, schools, friends, and family: How close is the property to your office, your kids’ school, or other destinations you plan to visit often?
- Safety: You should research the safety of the neighborhood by using a tool like NeighborhoodScout to learn more about crime rates in the area.
- Amenities: Consider proximity to amenities like grocery stores, gyms, barber shops, hair salons, shopping, healthcare, parks, and restaurants.
- Transportation: Accessibility of public transportation, freeways, and proximity to the airport are other important factors.
- Future development: Are there developers in your area working on any big projects that could impact this area’s desirability in the future?
The House Itself
Once you know you have picked the right submarket, there are some other location factors to consider after you have honed in on an opportunity.
- Neighborhood: You need to understand the neighborhood that you are buying in. Look at the age of the homes, whether the community is governed by an HOA, if it is a gated community, etc.
- Negative external factors: Think about whether there are any negative external factors that could impact the house that you are thinking about buying. Examples include if there is a nearby commercial building, traffic noise, or if the home is in the flight path of a nearby airport.
- Sun exposure: Sun exposure should be a big consideration, especially when buying in desert climates. The home’s sun exposure will impact utility bills and natural light within the home. In a desert climate like where I live, a north/south sun exposure home is the most desirable.
- Neighbors: Do the neighbors surrounding the home you are thinking about buying have pride of ownership? If the neighbors have a bunch of clutter in their driveway or their lawns are not well-kept, that will impact the desirability of your home.
The Location’s Significance
The significance of a property’s location can’t be understated or ignored. Just some of the ways it will impact you as a buyer include:
- Property value: The location of a property has a major impact on its value. A house in a sought-after neighborhood, close to desirable amenities, and in a good school district will generally command a higher price than a similar property in a less desirable area.
- Investment potential: When you invest in a property as a flip or a rental, a great location can lead to significant appreciation in your property value over time.
- Quality of life: Your surroundings have a huge impact on your quality of life. Picking a property in a great location can ensure that your life (or your tenants’) will be enhanced due to these conveniences and amenities.
- Resale potential: If you plan to hold your property for the long term, picking the right location to begin with will prove to be valuable. A property in a strong location will be more desirable to buyers while increasing the likelihood of your home selling faster and for more money.
The Bottom Line
This old “location, location, location” saying is a timeless, invaluable rule that we all need to be mindful of when buying real estate. There have been a few times in my real estate investing journey where I have ignored this principle and bought a property in a location that did not check all the boxes because I was eager to do another deal. In both instances, I faced challenges with achieving my investment objectives because I ignored this cardinal rule.
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A multi-family property can be a great addition to your real estate investment portfolio, but it’s important to look for any red flags before making a commitment. From the obvious things like pests and water damage to information that needs a bit more research, taking the time to examine the property can help you make an informed decision.
Low Current Interest in the Property
One of the first things investors should look for is the number of inquiries the property has been receiving. If the number is very low, it could indicate that something wrong with the property is turning away potential buyers.
Another thing to look for is how quickly current tenants are vacating the property. If tenants leave quickly and in large numbers, that could indicate serious problems. Don’t forget to look at the reviews of the property – these can be very valuable in determining whether investing is a good idea.
Investors can also look at the rental rates the property is charging. If the rates are significantly lower than other properties in the area, it could be a sign that the property isn’t well-maintained or in a desirable location. If the rates are higher than other properties, it could be a sign that the property is overvalued.
Signs of Water Damage
The damage caused by water can quickly become expensive and difficult to repair, so look carefully before investing in a property. Signs of water damage include:
- Stained ceilings, walls, and floors
- Peeling paint or wallpaper
- Discolored or warped tiles
- Cracks or bulges in the walls
- Musty odors
- Unexpectedly high humidity
- Evidence of mold growth
- Rotting wood
These should be taken seriously, as they can indicate a much larger underlying issue. It’s important to thoroughly investigate any potential signs of water damage—or even indications that it could be imminent, as a widespread issue could very well fall under the maintenance the property owner is responsible for, as opposed to tenants.
A Busy Sales History
A review of the sales history of a property can tell potential investors a lot. If there have been multiple sales in a short time, this could be a sign of instability or a lack of investor confidence in the property. It could also be a sign of a problem with the building or the neighborhood that could cause difficulty in maintaining or increasing the value of the property.
In addition to looking at how often the property was sold, try to find out why it was sold, if any changes were made, and how the property has been managed. Investors might be able to find out some of this by speaking with any previous buyers or sellers. These conversations can provide additional insight into the area and the building.
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Signs of Pests
Pests are often a sign of a poorly maintained property. Look for signs of common household pests, such as rats, mice, roaches, or bed bugs. Signs of an infestation may include the presence of droppings, gnaw marks, and nests. Be sure to ask the current owner about any previous pest issues and take note of anything suspicious. Investors may want to call in a pest control professional to inspect the property and advise on any necessary treatments.
It’s important to also consider the risk of future pest problems. Look for any potential entry points that pests may use to enter the property, such as cracks in the walls and holes in the foundation. Additionally, check the surrounding area for any potential sources of food or shelter that may attract unwanted critters. Be sure to take preventive measures to reduce the risk of future infestations, as tenants might not be happy about being asked to help with pest control.
Work Done Without Permits
Another potential red flag for investors is work done on the property without the appropriate permits. This can be a major issue and should be investigated thoroughly before committing to the purchase of a multi-family property. A lack of permits can indicate that:
- The work was not completed to code: This can be extremely dangerous and costly, as it may require significant repairs or upgrades to bring it up to code.
- The owner is trying to hide something: This could mean hidden water damage or other potential issues that can be costly to repair or replace.
Investors familiarize yourself with the local government. That’s where you go to check if the property has the required permits for any renovations that have been done. If not, they should determine why the permits were not obtained and if the work was done correctly. In some cases, the investor may need to hire an inspector to check the work.
Don’t Ignore Red Flags When Investing
Investing in a multi-family property can be a great financial investment, but it’s not without risk. Maximize your chances of success. Keep an eye out for warning signs such as a busy sales history and unpermitted work. Doing research and having an experienced real estate professional inspect the property can help ensure that the property is a good investment.
Want to read more about what to do when buying your next rental investment? Check out our blog Buying Rental Property? Make Sure You Evaluate These Structural Items!
Thank you to Asbestos.com for providing this informative guide.
Homes built before the 1980s could expose homeowners, their families and others to asbestos. It may hide in cement, floor tiles, insulation, walls and pipes. Our Guide to Asbestos in the Home can help protect you and others from exposure.
If you’re doing work on your home, like taking down walls or replacing floor tiles, take caution. You could contaminate the air with toxic asbestos fibers.
Our Guide to Asbestos in the Home offers information about asbestos, its dangers, what to do if you suspect it’s in your home, the dos and don’ts when handling asbestos and other useful information to keep you, your family and others safe in your home.
Is Asbestos in Your House Dangerous?
When residential construction products made with asbestos, a mineral composed of thin fibers, are damaged, those fibers become airborne. Asbestos fibers pose a danger to anyone who inhales them.
After years of exposure to those fibers, people may develop a cancer known as mesothelioma, which forms tumors on the lining of the lungs, abdomen or heart.
Quick Fact
Most asbestos-related diseases are diagnosed at least 15 years after exposure.
Source: American Cancer Society
Where Can Asbestos Be Found in Your House?
If you have an older home, asbestos may be found in various building materials used in your house, such as paint, insulation and floor tiles. Many U.S. homes and public structures, such as schools, government housing and office buildings built before the 1980s, contain asbestos in:
- Cement asbestos board siding/undersheeting
- Asbestos roofing felt for shingles
- Asbestos insulation around steam pipes
- Some vinyl floor tiles
- Textured paint
- Asbestos-containing vermiculite insulation
While many residential uses for asbestos were phased out, it remains legal in the U.S. for more than a dozen applications.
Common Exposure Scenarios
Asbestos exposure in your home can occur in different ways: DIY renovation, drilling through drywall or replacing an old pipe. The following scenarios describe how homeowners can expose themselves to asbestos at home.
Attic Renovation
While remodeling the attic of his 1960s home, John found piles of brown pebble-like insulation. He decided to replace the existing insulation with new fiberglass insulation to save money in the winter months. He scooped the loose insulation into some garbage bags and installed the new material.
John had no idea that his attic was insulated with asbestos-containing vermiculite. By disturbing the material, he spread asbestos fibers in the air. John should have left the insulation alone and had it tested for asbestos before disturbing it.
Brake Dust in Home Garage
Ralph loves working on his 1965 Corvette Stingray. When his brakes started to squeal, Ralph wanted to replace them in his own garage. After removing the rear tires, he saw the brake drums were covered in dust. He banged the sides with a hammer and blew off the dust with an air compressor.
Because some brake components contain asbestos, spraying them with compressed air can release toxic fibers into the air. Ralph should have taken his car to the shop for service or wiped down the brake drums gently with a wet cloth.
Drilling into Asbestos in Drywall
Erica recently won a painting at a silent auction and couldn’t wait to bring it home and hang it in her living room. She measured carefully and used a drill to install drywall anchors to keep the painting in place. The painting wasn’t level, so she had to drill a few more holes before it hung perfectly.
She had no idea her home was built with asbestos-containing drywall. When she drilled through the wall to hang her painting, asbestos fibers from the drywall escaped into her living room. Erica should have known about the asbestos in her walls and left it alone.
Removing Vinyl Floor Tiles
Herman just purchased a 1950s fixer-upper in his home town, and his first project was upgrading the master bathroom. He decided to start by removing the vinyl floor tile. He removed the existing tiles with a scraper and installed the new tile.
Asbestos was a common ingredient in vinyl floor tiles in the 1950s. Using a scraper to remove the old flooring can release dangerous asbestos fibers. Herman should have installed the new tile over it.
Popcorn Ceiling Removal
Janine was tired of the popcorn texture on the ceilings in her home, so she decided to scrape it off and repaint with a smooth finish. After putting on eye protection and a dust mask, she grabbed her ladder and got to work. After lots of scraping, a little sanding and some careful painting, she was finally done.
Many textured ceiling finishes, including popcorn ceilings, have concealed asbestos. Scraping off the popcorn finish released microscopic asbestos fibers that easily passed through Janine’s dust mask. She should have hired a professional trained in safely removing asbestos hazards.
Although it is the safest option, hiring asbestos abatement professionals can be expensive. However, before removing the entire popcorn surface, homeowners can scrape off a sample and perform home testing with a store-bought kit. Removing even a small piece for testing still requires protection, such as eye protection and an N95 respirator.
Cutting Insulation on Pipes
When fixing up the basement of his late-1800s Victorian home, Brent noticed the insulation around some of the hot water pipes was starting to deteriorate. Not wanting to lose any heat efficiency, he cut the old insulation with a utility knife and replaced it with new fiberglass insulation.
Brent should have known that many older plumbing systems are wrapped in asbestos insulation. The insulation may have already posed an exposure risk before he started the project, but cutting the damaged material released even more fibers into the air. Brent should have hired an asbestos professional to seal the asbestos insulation.
What Can I Do About Asbestos in My Home?
The Environmental Protection Agency recommends testing your home for asbestos if the existing building materials are damaged or you plan on disturbing them. Situations where testing is recommended include having damaged drywall or insulation, or if you’re planning on remodeling.
Disturbing these building materials can release asbestos fibers into the air. Generally, you can’t tell which materials contain asbestos unless they’re labeled. If the building materials are in good condition or if you’re not planning a home remodel, testing is generally not required.
If you find something in your home that you suspect is asbestos, don’t touch it. Even if the material is in good condition, the best option is to leave it alone.
According to the U.S. Environmental Protection Agency, if the material appears damaged or future activities could disturb it, contact a trained and accredited asbestos professional. Limit access to the area until a professional can confirm the presence of asbestos.
The best way to avoid asbestos exposure is to be knowledgeable about the asbestos materials in your home, including their locations and current condition.
How Can I Tell if a Material in My House Is Asbestos?
It’s extremely difficult to identify asbestos just by looking at it, so you need to send samples to a lab for testing.
Homeowners can collect samples and have them tested, but it’s much safer for you and your family to hire a trained asbestos professional for the job.
Search for “asbestos inspection” online to find a licensed expert in your area. The U.S. Department of Commerce offers a list of accredited asbestos laboratories online.
What Does Asbestos Look Like?
Asbestos ore in its natural form may appear in a range of colors, including white, green, blue and brown. When asbestos is processed it breaks down into fluffy fibers.
While asbestos in household products is not easily identified by sight alone, sometimes it is possible to see asbestos fibers embedded in damaged asbestos-containing materials.
Tiny asbestos fibers often end up in household products when asbestos is mixed with other materials, such as plastic or cement. When these materials are damaged, small asbestos fibers that look like fuzzy pieces of fraying fabric may be visible. However, seeing fibers protruding from a product does not mean it contains asbestos. Only testing can confirm the presence of asbestos.
How Much Asbestos Exposure Is Harmful?
In general, it takes a lot of repeated exposure to asbestos for related conditions to develop. It is rare for someone to get sick from asbestos products in their home, but it is possible.
Most people who develop asbestos-related diseases were exposed to asbestos at work for years. About 20% of heavily exposed asbestos workers end up developing a related condition.
Still, heavy short-term asbestos exposures have been known to cause disease. According to a National Institute for Occupational Safety and Health report on asbestos, “No evidence of a threshold or safe level of exposure has been found.”
Asbestos Safety Dos and Don’ts
If you own an older home, take every precaution to avoid damaging materials that may contain asbestos.
Even if a repair seems minor, you should hire a professional when asbestos may be present. Improper handling of safely managed asbestos can create an exposure risk where there was none before.
Do’s
- Avoid any contact with dangerous asbestos materials.
- Take every precaution not to damage any materials that may contain asbestos.
- Talk to your home inspector or real estate agent about any known asbestos risks in your home.
- Only hire trained professionals for asbestos inspections, testing, repairs or removal.
- If you are planning on a demolition, contact the appropriate regulatory agency in your local or state government.
Don’ts
- Don’t saw, sand, scrape, drill or disturb materials that may contain asbestos.
- Don’t sweep, vacuum or dust debris that may contain asbestos.
- Don’t collect asbestos samples for testing without proper training.
- Don’t perform any work on or near asbestos materials unless you’re trained and certified.
- Don’t remove asbestos unless repair or concealment is impossible, and there’s a high risk for exposure.
- Don’t dispose of asbestos materials with normal household waste.
How Do I Get Tested for Possible Exposure to Asbestos?
If you are concerned that you were exposed to asbestos, start by talking to your primary care physician. There is no test to determine if you’ve been exposed to asbestos, but there are tests to detect asbestos-related diseases.
Your doctor can order imaging scans that reveal signs of asbestos-related disease.
Asbestos-related conditions are difficult to detect, and not all primary care doctors have the tools and experience to diagnose them.
If you know for certain that you were exposed to asbestos, it is a good idea to seek annual screenings from a qualified lung specialist such as an occupational pulmonologist.
Most asbestos-related diseases are diagnosed at least 15 years after exposure.
Quick Fact
Asbestos is the No. 1 cause of mesothelioma.
Source: National Cancer Institute
How Much Does Asbestos Testing Cost?
The most popular testing method, Polarized Light Microscopy (PLM), can range from $20 to $100 per sample. Some labs use Transmission Electron Microscopy (TEM), which is more expensive.
The cost of asbestos testing varies depending on the number of samples tested and the methods used.
DIY test kits require you to mail samples to an accredited lab, which may charge an additional fee that is typically around $40 for analysis.
However, if you collect samples, you can create exposure risks. It’s best to hire a certified professional. The total cost of labor can run between $350 and $600 — a small price to pay for peace of mind that the job will be safely completed.
What Happens if I Violate Asbestos Laws?
Any activity involving asbestos must follow U.S. Environmental Protection Agency regulations as well as any state asbestos laws. Some asbestos violations result in written warnings.
Others can bring criminal charges, prison time or daily civil penalties as high as $25,000 for each violation, depending on the severity of the infraction.
WRITTEN BY
Michelle Whitmer, Asbestos Expert and Writer
(888) 382-0020 OR michelle@asbestos.com
Michelle Whitmer has covered science and medicine for Asbestos.com for more than 15 years. She has been featured in multiplatform media, including The New York Times and KYW Newsradio. Whitmer is pursuing American Medical Writers Association certification, has completed OSHA Asbestos Standard for the Construction Industry training and is CDC certified in Health Literacy.
- Expertise: Asbestos and talc, asbestos in makeup
- Certified in OSHA Asbestos Standard, AHERA Asbestos in Schools and CDC Health Literacy
- Member of the American Medical Writers Association, National Association of Science Writers and the Academy of Integrative Health & Medicine
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