We put together list of questions that you need to ask as a Buyer-Investor in Puna, when you want to ascertain whether a certain piece of Puna Real Estate is really the right fit for your needs.
What is the MLS of the property?: The MLS will give you a little bit of an idea how long the property has been on the market, (check
‘How to read an MLS sheet’
). Properties that haven’t sold yet - even though they have been listed for quite a while – may suggest that there is something wrong with the property or title or that the price is just too high for what the property offers.
What is the TMK of the property?: The TMK number is important because it gives you the exact location, owner name, tax bill history, etc. If you are not familiar with how to read the TMK and how to use it for due diligence work,
read more here
Brief description of the property: We naturally fell into the habit of referring to properties based on some outstanding quality or feature it had. That way when we go back to the questionnaire at a later time, we don’t have to remember properties by their street address. Anything that stands out about a property would work. For example, we looked at a property that had a lot of termite damage. We always referred to it as the ‘termite house’. These kinds of descriptions conjure up an instant picture in the mind of a property and this has proven very helpful to us in retaining a clear impression of a property.
Who is the listing agent?: Name and phone number is sufficient. This question does not apply for when a property is for sale by the owner (FSBO).
Do you have any maps or photos of the property and/or area?: A picture does paint a thousand words but even better is to actually visit Puna and look at the property with your own eyes.
Name: I usually ask for the owners name to see if it matches with the name that comes up in the TMK search.
Address: This information will give you an idea, if the seller is a local owner or absentee owner. You can retrieve this information also from the TMK search.
Phone number: I’ve never met a listing agent who will give you the phone number of the seller because he does not want to loose his leverage in the negotiation. But you can just get the name of the seller and the city that comes up in the TMK search and use an online phone book or the white pages to find the telephone number.
Why is the seller selling?: There are many different reasons why a seller is putting his property on the market. The reason you ask this question is so that you can get a feel for how flexible the seller is. If someone is selling their property because of an unhappy event such as illness, divorce, death, or job loss, they might be more negotiable than an investor who puts his investment property back on the market, because it is a “good time to sell”.
How long did the seller own the house?: This might give you a clue about whether the seller is an investor, or how much the owner will know about the property, in case you want to talk to him.
Is the seller flexible in price or terms?
Is there a clean title?: Even though some title problems are reversible, most people only want to deal with clean titles. One footnote in this connection for a bargain-hunter: Bank-owned properties always have a clean title and they are usually very inexpensive simply because the bank is in the banking business – not the real estate business.
Is the seller current with his tax payments?: You can retrieve this information also from the TMK search.
If you inquire about a property that is listed with an agent, ask the agent for an
MLS data sheet
first, because many of the questions listed here can be answered with the information retrieved from the MLS data sheet.
Address: This is listed on MLS data sheet.
In which subdivision is the property located?: This is listed on MLS data sheet.
Is it on a paved road?: Properties on a paved road can sometimes be $10-20K more expensive than properties in the same subdivision on a graded road.
Is the property fee simple or leasehold?: This is listed on the MLS data sheet under Land Tenure.
What’s the zoning of the property?: This is listed on MLS data sheet.
Are there any CC&R’s for the property?: This is listed on MLS data sheet.
What is the size and dimension of the lot?: Some subdivisions consist mainly of what are known as ‘spaghetti lots’. These are lots that are very long and narrow. In terms of privacy it is better to get a square lot, but they are usually more expensive. One way around this problem is to buy two spaghetti lots side by side and apply to change the subdivision of the properties into two square lots and resell one of them. In that way you are not just increasing the value of your own property, but also putting some money in your pocket by re-selling the other square lot.
How long has the property been on the market?: Of course you need to ask this in case of an FSBO sale, because there is no MLS number from which you can determine how long the property has been listed on the market. But even when I have the MLS number and I know when the property was listed, I still ask the listing agent how long it has been on the market just to see how honest the agent is. Because if the agent doesn’t tell me truth about that then they might not tell me the truth about other things in connection with that property either.
In which Lava Zone is the property?: The Big Island is divided into different
, which represent the degree of risk an area has to be covered by lava in case of an eruption and this effects what kind of insurance you can get.
Are there any dangerous areas on the property, like lava cracks or unstable lava tubes?: This is especially important if you have kids. Lava structures can be extremely dangerous.
Is the property in (or close to) a flood zone?: There are some subdivisions like Hawaiian Acres that have areas where flooding is possible. I would not even consider properties right next to flood zones as good investment, because the past has shown that the more Puna develops, the less water is able to drain properly and this will cause bigger floods to occur.
Is there power on the property?: If the answer is no, always ask how much it would cost to get it hooked up. A lot of times it makes more sense to just call HELCO (Hawaiian Electric), because most sellers don’t really know how much it costs. Don’t ever just take someone else’s word for how much it would cost to get power to a potential property – because there can be some pretty costly variables that you will want to consider in advance of purchasing a property.
Are there any encroachment problems?
Are there any assessments due?
Does the property have direct road access or legal deeded easement access?
Is the house finished?: Be especially careful with unfinished permitted structures, because the permit might not be valid anymore. The text in the ad will usually say something like, “Permit was pulled but never finished” So always find out why it was not finished and if the permit is still valid. The building codes may have changed since the time that the permit was first issued and it may require costly improvements to the structure to get a final.
What’s the condition of the structure and how old is it?
Are there any repairs necessary?
Is there mold, dry rot or termite damage?: If there is termite damage be sure to get a qualified inspector out to have a look so that you are well informed of the real situation with the structure.
Is the roof leaking?
Are house plans available?
What is the square footage of the house?
How many rooms are there?
What is the size of the rooms?: We’ve noticed that sometimes a space the size of a walk in closet is called a room and is so small that it actually would not even fit a full size bed.
Was there a certified appraisal done recently? Appraisals are usually only done when the seller is seeking conventional loan financing. Many sellers in Puna try to sell their property for cash, so there is usually no appraisal available.
Are there any other improvements on the property?: Sometimes properties have un-permitted structures such as a utility shack or a garage on the premises.
Buyer-Investor TIP: If there are tenants in the house, you should ask if they are nice, if they pay on time, how long they’ve been there and if you would buy the house, would they like to stay on there.