What you need to look out for when buying an investment property is largely the same as when buying a home for yourself. However, you are also looking at anything that can harm the value of the property, or the income you can expect from it.
If the property has been repossessed, you should be interested in why this has happened. If the only reason is an inability of the previous owner to make the mortgage payments that is one thing. However, if the property was on the market for a long time prior to repossession, you need to exercise caution as to why it remained unsold. Neighbors and the estate agent may be able to fill you in on hidden problems that were the cause of previous potential buyers pulling out.
Whenever buying any property it is a good idea to do your own survey first. You should do this to supplement a full building survey as the only route to compensation if the surveyor misses anything will likely be a lengthy legal action against his insurers.
You may think you do not have the skills for this, but anyone can spot roofing timbers that have been sawn through or cracks in walls. You can also measure each room to check there are no structural walls not supported from below. A surveyor does not normally perform this function and therefore is easily able to wriggle out of any responsibility for such problems. I would recommend you take a stepladder, torch, large spirit level and damp meter and note anything that might be a problem. You can then draw these concerns to the attention of your surveyor. This is an example of the extra caution that should be exercised when dealing with repossessed houses for sale.
If the property has party walls it is a good idea to ask to view the property late in the day, or at weekends, to identify any potential problems with noise transmission. This is one of the main reasons for people moving from a property and it is expensive to attempt to improve the situation if a problem is later discovered.
If the property is to be rented, also look out for any fixtures and fittings that may not be suitable for this purpose. Beige wool carpets and wood block worktops are all very well in your own home but are likely to fair badly when in the hands of a tenant. Similarly, think carefully about leaving an open fire or wood burner in place in a rental property.
It is worth familiarising yourself with the process of buying a repossessed property if you have never done this before. The bank will reject offers until they come within a certain percentage of the asking price. Having your offer accepted is the start of a nail-biting process. All interested parties will be asked for their ‘best and final’ offers. Whoever has the highest offer will then have a nail-biting wait, as the mortgage company are required by law to publish their offer in the local paper alongside the property details.
Finally, it is worth noting that it can sometimes be hard to find good repossessed houses for sale. Property investment companies such as National Homebuyers investments are very useful as a repossession house finding solution.