Wednesday Wake-up: June 4, 2025

Picture this: You’ve just closed on an attractive duplex in a fast-growing city. The numbers look great, the renovations are recent, and the curb appeal is on point. You’re already imagining the steady rental income and long-term appreciation.

But then, just days after the deal is done, you get a call from a local code enforcement officer. Turns out, the previous owner had racked up a list of unresolved violations—everything from unpermitted work to unresolved tenant complaints. Suddenly, your “turnkey” property is looking a lot more complicated.

This isn’t just a cautionary tale—it’s a real-world reminder of a timeless principle in real estate: Due diligence is everything.

In today’s market, persistent housing shortages and affordability challenges mean rental properties are in high demand. But that also means competition is fierce, and some sellers are eager to pass off their headaches to the next buyer.

You might assume that disclosure laws protect you. And yes, sellers are supposed to share what they know. But here’s the catch: They’re only obligated to disclose known issues—not to dig for hidden ones. That puts the onus squarely on you, the buyer, to uncover any lurking problems before you sign on the dotted line.

So how do you avoid stepping into an investment trap?

Here are some smart steps to add to your due diligence checklist:

• Talk to the locals: Neighbors and nearby business owners often have the inside scoop on a property’s reputation and any recurring issues.
• Check public records: Look up code violations, unpaid taxes, or legal disputes tied to the property. These can be red flags that don’t always make it into the listing.
• Review rental history: Was the property vacant for long stretches? High turnover or long vacancies can signal deeper problems.
• Research the neighborhood: Beyond crime stats, look at local development plans and school ratings. These factors can influence both tenant demand and long-term value.
• Understand the HOA: If there’s a homeowners’ association, dig into their rules, finances, and recent meeting notes. A poorly managed HOA can quickly turn an investment sour.
• Inspect beyond the basics: Don’t just look at paint and appliances. Ask about past insurance claims, pest issues, and even neighborhood stigmas that could affect your rental pool.

Remember: In a market where demand is high and properties move fast, it’s tempting to rush. But a little extra research now can save you from inheriting someone else’s problem—and protect your investment for years to come.

Don’t let a hidden issue turn your next opportunity into an ongoing headache. Take the time to dig deeper, ask questions, and walk away if something doesn’t feel right.

After all, in real estate investing, it’s not just about finding a deal—it’s about finding the right deal.