5 Red Flags to Watch For in an Investment Property

Reno’s upcoming ADU ordinance isn’t just a zoning update; it’s a strategic opportunity for investors who know where to look.

What Investors Should Look Out For

Not every property is worth your capital. The best investors know when to walk away just as much as they know when to buy. In today’s market, speed matters, but so does caution. Here are the five most common red flags that can turn a promising rental into a money pit.

1. Unexplained Vacancies

If a property has long or frequent vacancies, you need to ask why. Is it priced too high, poorly managed, or in a neighborhood tenants avoid? High turnover and long vacancy periods can eat into your cash flow fast. 

2. Deferred Maintenance

Fresh paint can cover cracks, but it won’t fix a bad roof, outdated plumbing, or an aging HVAC system. Look beyond cosmetic updates and dig into inspection reports. Big capital expenses can quickly wipe out projected returns. Take a look at some of the small details can give you an overall picture of how well a property is maintained.

3. Overly Optimistic Rent Projections

Some listings will advertise rental income based on “pro forma” numbers instead of actuals. Always verify with current leases, rent rolls, and market comps. Overinflated rents are a classic trap for rookie investors. We have over 26,000 rental data points to dial in an appropriate number.

4. Legal or Zoning Issues

Illegal units, unpermitted additions, or unclear zoning can put you at risk of costly legal battles or insurance issues. These problems are often buried in fine print and overlooked until it is too late. Confirm what the County Assessor shows for bedroom count, converted garages, or livable basements.

5. Outdated Systems

Does the property have knob and tube wiring, old electrical panels, mlead pipes, galvanized plumbing, old sewer lines, central heating, and air conditioning?  These can be big expenses and raise insurance costs if they have not been updated. 

Final Thoughts

The best deals aren’t just about price; they’re about risk. Spotting these red flags early allows you to negotiate better, budget properly, or simply walk away. Protecting your capital is the first step toward growing it.

Want help finding properties that pass the test? Schedule a strategy session with me today.