Buying Rental Property – Avoid Seller’s Tricks

Be careful when buying rental property. We stayed at a motel for a week one winter. The bill showed twice what it should have, but since I already paid the correct amount in cash, I thought nothing of it. When we noticed that the lobby and swimming pool were unheated, we thought it was frugality. Only a year later, when I read a news story about a new owner struggling to make the motel work, did I realize what was going on. The owner had been planning to sell. To prepare, she was using the two most basic ways to inflate the appraised value: decrease expenses and increase reported income. By stopping repairs and quietly adding $100 in income every …

Buying Investment Property

First a little story about buying investment property. My wife and I stayed at a motel in Tucson for a week one winter. Our bill was for twice what it should have been, but since I already paid the correct amount in cash, I thought nothing of it. During our stay, we noticed that the lobby and swimming pool were unheated, and passed it off as frugality. A year later, however, when I read a news story about a new owner struggling to make the motel work, I realized what was really going on. To prepare the motel for sale, the owner had been using the two most basic ways to inflate the appraised value: decrease expenses and increase reported …