Hacking for Real Estate Investors: Learn What You're Not Being Told

Hacking has a bad reputation - although "cracking" is the proper word for using your computer skills to break into systems to get information you shouldn't have - we are stuck with the word. In one sense of the word, hacking means "using a computer to snoop for information". I've recently been hacking for real estate information, peeking at neighborhoods, finding the current owners of houses, and making sure that the improvements they are bragging about were done legally. Here's how you can legally find out information that a property seller might be concealing or might not know.

Start with Google maps for a birds-eye view of the neighborhood you are interested in. Zoom in and out, looking for how close the property is to large buildings, major streets, and significant local landmarks. Any feature may be good or bad, depending on your needs, but you need to have good information to make a good real estate investment decision.

With a bit of experience on Google maps you can tell a declining area from a stable or developing area. Look at neighborhoods you are familiar with to get the experience. Declining areas have many vacant lots, partly demolished buildings and empty slabs, cars parked in the back yards, and dead landscaping. Stable areas have the cars parked on driveways, the landscaping looks maintained, and there are few vacant lots. Developing areas have evidence of construction, with partly finished houses and some finished houses among the vacant lots. In a housing boom, large areas of farm land can turn into a dusty, noisy construction site in a few days.

The rest of the sources may not always be available online, but it's worth the time to look.

The property tax assessor's web site is the next place to look. To find the assessor, search for the name of the county and the word assessor, or look at the county government website. Typically the assessor's office information will include the year of construction, square footage, room counts, and construction method. If this is significantly different from the seller's description, it's a warning to check further. As an example, one house in my old neighborhood was being advertised as a 1920s bungalow, when it was really a 1960s owner-built replacement for the original house. The clue was that the original house was listed as frame and the house for sale was concrete block.

The city government website may have a link to the zoning and building permit departments. If you are lucky, they will have all the permit applications online. The information from the building permit office can prevent you from expensive real estate investment mistakes. It's a nasty surprise to find out that the master bedroom suite addition was done with no permits and inspections.

If you find out about any permitless improvements before you make an offer in real estate, specify that the current owner has to clear up the permit problem before closing to make the house as described legal, or the deal is off. The current owner might not have been the one who made the illegal changes, but don't let them pass the problem on to you. Don't let them persuade you that you can pay the permit fee and make it all legal. Bringing a house up to current standards may mean tearing out the improvements and redoing everything. If the improvement would never have been granted a permit, you might be required to remove it with no replacement.

Checking the city crime statistics for the neighborhood is possible in many cities. If the city government or police web site doesn't have a crime statistics page, search for the phrase "crime statistics" and the city and state or county. All neighborhoods will have crime. Only you know what level you are willing to live with.

Don't forget to search for the address on Google. Enter the address and see what comes up ... you may see fires, murders, or prizes for neighborhood beauty. I found out that my house had been the residence of a noted local businessman in the 1930s and the scene of an many drug arrests in the 1970s.

Happy hacking!