Avoiding The Domino Effect

Why buying investment property is much easier than home buying

The domino effect is probably the greatest reason buying investment property is much easier than purchasing a home.  You simply don’t have to worry about timing your purchase or sale with another purchase.   Another key stress reducer is the absence of emotionalism in the buying process. This simple fact is borne out in the reduction of several other stressors normally experienced when home buying.

For one, no investment property purchase should be a “life or death” decision. You just don’t invest yourself with the same sort of emotion as you would where you will be purchasing your own home. So when issues of time delays or title issues come up, you can look dispassionately at whether to continue going through with the deal or not.

Natural stressors reduced – no domino effect

When it comes time to sell your investment property, you don’t have to worry about coordinating a home purchase with it, which is usually fraught with anxiety-producing considerations. Issues such as waiting for your buyer to get their loan commitment while also trying to obtain your own loan commitment on the buy side are avoided when you’re involved in only one side of an investment property sale.

It’s also easier to disengage early on in the process, if, for example, the buyer in your investment house sale asks for more time to seek a loan commitment (especially after possibly being turned down by a lender initially). You’ll find it’s a quicker break to nix the first buyer and go with another potential buyer, rather than wasting your time and waiting for the first buyer to obtain a different lender’s commitment.

Build delays into your budget

Another less painful aspect of property investing relative to home buying, is that when delays in the buying or selling process arise (and they usually do), you can plan ahead of time for them, and build in any additional time costs into your overall budget. For example, if you’re on the purchasing side and you find out just before setting a closing date that there are Certificate of Occupancy issues the seller did not know about, and must rectify in order to close, you’ll be better able to take the delay in stride if you’ve planned on an extra few weeks or month in which to close on the property. But in home buying, you may not have that luxury. Especially if you are trying to coordinate the sale of your property concurrently. Basically, this “domino effect” is greatly lessened in ay investment property scenario.

Avoid conditionally pre-approved buyers

So in the current tight credit real estate market, as a seller of investment property, it’s best to find a buyer with a strong lender pre-approval already obtained. Just be sure they are not relying on the sale of their property to make your deal work. This is known as a conditional sale, and will produce many of the same potential headaches as if you yourself were buying a home yourself, Be sure not to get caught in the middle of this crippling domino effect.

 

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