The savvy real estate investor knows how to find distressed property and determine how much it will take to rehabilitate the home and if a final sales price will cover the costs of repairs as well associated selling costs. That same investor alsoreal estate investing knows when to see a money pit to be avoided at all costs.

One of the things experienced investors do is to visit the property after a hard rain. The first reason might be to look for evidence of a roof that needs replacing or major repairs but when a roof does in fact leak water and water spots appear on ceilings, there could be structural issues hidden to the naked eye that are slowly destroying the building.

At the same time, check out the basement and the sides of the house. Does water build up around the side of the structure? If so, water is likely seeping in the property and around the foundation, causing potential shifting of the structure. Inside, can you smell mold? Water shouldn’t stand around the home and should fall away from the property, not pooling up around it.

Take a tour inside. Even though someone thinks they’ve never experienced mold odor, once they first do it’s immediately identified as a “moldy” smell. There’s no mistaking mold odor inside a home and a sign that the property could have some major issues beyond the physical structure. Some people can’t handle the mold spores, causing illness.

Tell-tale cracks around the walls and diagonal cracks alongside door jambs indicate the structure is settling and the foundation needs some major work.

Finally? If there is more than one of these problems on the same property it’s probably best to find another prospect. Such existing problems can never truly be remediated and it’s something you’ll always have to disclose to potential buyers.