Guide to Ethical Real Estate Investing

Real estate investors have an international bad reputation for taking money from potential home buyers. Are they any different to car salesmen or any other professional that is dependent upon your spending to make a living? They can be. A caring real property investor is a gem and, together with wise practices on the part of a buyer, can make a whole lot of difference to how successful investing in real estate is.

Ethics do come into play, because like with any other commodity, if sales staff are on a commission basis, the details that you give you, or in many cases, fail to give you, might make or break the deal.

The trend these days of investing in property is spreading. Buying houses, doing them up cheaply and then selling them on may make astounding amounts of money in the short term, though ethical investment will make more long term.

Buying property.

Looking for bargains and knowing your ability to turn those houses around is important. Do the works required to make that house an investment consist of structural and specialized work or are they cosmetic enhancements that are needed to sell the home on? Many unethical property investors do cosmetic cover up jobs to sell homes to those people who are foolish enough to buy without proper advice from professionals. These are the homes to be wary of. If you want to run an ethical property business, this isn’t the way to do it.

When looking at homes, look at the potential, but also look at costs of putting right those major factors that make the purchase seem cheap. Work out costs of electrical re-wiring, septic tank installation, plumbing replacement, kitchen renovation, and general realistic costings on what that house would cost to make a profit.

Work also on the amount of time that it would take to initiate these repairs and re-market the property without cutting corners, remembering that every month that you own the property, it costs you money.


If finances do run out, and shortcuts have to be made, an ethical property reseller will be honest to potential purchasers about what works need to be done, adjust the price a little to take account of this. An unethical one will hide those defects hoping that the purchaser won’t notice and will not have the expertise to know that they really do need a full survey on the property.

Sales and documentation.

An ethical house seller will keep all records, comply with Capital Gains tax obligations, and by keeping records of all costs of the renovation, will be able to write off many of these costs against the capital gains liability.

Long term, the effects of ethical trading do pay off. Those that trade unethically find themselves in the claims courts and with reputations to match their behavior, whereas an ethical property investor will get more business by recommendation from those clients that bought and lived in the houses that they re-marketed and made into decent homes at reasonable prices.

Keep potential buyers informed and try and help them progress by encouraging them to employ surveyors. Show confidence in the quality of your workmanship.

It is never worth the temptation to become a rogue property investor, because it catches up with you. Be honest, offer quality and value and you won’t go far wrong.