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It has been said that a well written real estate contract is like a “work of art.” Using “a one size fits all” standard contract without having risk protections built in, is essentially like shooting yourself in the foot.

That being said, I’ve listed 5 key clauses to include in your contracts when buying property as a real estate investor:

1. And/or assigns: If you’re wholesaling, this is definitely one clause you don’t want to do business without! This clause gives you the freedom to assign your rights as the buyer and have another buyer to take over your position in the deal.

(NOTE: If you’re using a contract that doesn’t have this verbage in the contract, hand writing “and/or assigns” into your contract will supercede the typed written wording.)

2. Financing Contingency: Why use so-called “weasel clauses” when you can just be transparent? Including the following financial contingency clause in your contract clearly communicates to the seller that you’re purchase of the property depends on your funding source:

“This offer is contingent upon you (the buyer) obtaining financing from said lender.” If you’re using conventional financing, attaching a pre-qualification letter that states: “A pre-qualification letter from said lender is attached” provides additional security to the seller that you are serious and prepared to seal the deal.

3. Inspection Contingency: Not opting for this contingency clause can be a costly mistake! Think about it? Finding problems with the property AFTER you’ve purchased it is not the time for the slogan “more will be revealed.” Specificity is key.

4. Escrow Contingency: Stay in control of where the funds are held. Why? Creative real estate investing strategies aren’t necessarily popular with title companies that don’t understand our way of buying properties. As I stated earlier, specificity is important - spelling things out can save you from a lot of frustration in the process.

5. A Date Extension Contingency: I’m not suggesting that you use this clause as a stall tactic, but let’s face it - life happens.

Who can argue with this: “Said date may be extended an additional fifteen (15) days if lender requires additional documentation, paperwork or actions from the buyer and said delay is not due to the fault of the buyer.”

That just about covers anything and everything that can go wrong before a deal closes. One other thing, offering some kind of “what’s in it for me” benefit can go a long way with a seller agreeing to this sort of contingency.

As with these, and any other contract clauses, ethics and integrity should be the guiding force when deciding what clauses to include in your contracts.

One other point, be sure to have an attorney review all contracts before submitting an offer, this is not to serve as, or substitute for, any legal advice.