How Can Inspections Save You Money in Real Estate Investment?
Think about this: any property you come across is likely to be a used good. Real estate investment is like a garage sale; only instead of exchanging old t-shirts and record players, you’re buying and selling the actual garage, the High Victorian, the Colonial.
You will never find the perfect house, but you may certainly find the perfect house for you. For these reasons, it is absolutely essential that your investments are inspected thoroughly by a licensed professional. The sale of property is always negotiable, and a proper third-party inspection is a tenant of the deal that you’ll want to remain always firm upon. Put it in writing, and get it signed. Leave nothing to chance.
Here are a few things to consider:
If there is wood in or on the property, you may need a separate termite and pest inspection of the premises. General home inspections focus primarily on structural and mechanical features; they don’t typically check for bugs. Here again is an opportunity to get to know your inspector. Termites, carpenter ants, mice and other bugs can severely weaken walls, floors, attics and shelving. They can chew through wiring and cause electrical problems.
Professional inspectors will likely begin at the foundation, searching for major cracks, level ground, and/or evidence of water damage (i.e. water stains, mold, mildew, and mineral deposits). Some inspectors will also check for the presence of radon gas concentrations.
The house is examined as a structural whole; angles and joints and frames must meet at proper locations to ensure a solid foundation. Plumbing and electrical systems are inspected for damage, wear, and to be certain they conform to industry specifications. Pipes are checked for leaks, rust, lead, and other chemicals. In addition, some inspectors measure flow-rate and water pressure.
It is important to have properly functioning electrical systems. Be weary of faulty wiring, uncovered switches or receptacles, incorrect grounds, inadequate or malfunctioning circuit breakers, or poor-quality GFCI trips (those tiny red buttons in the middle of your outlets, which act as miniature circuit breakers).
Air conditioning and heating systems will be checked for duct leaks, the condition of filters, and adequate capacity and flow. It is also important to ensure that the thermostat is in proper working order.
Attics are checked for proper framing and strength, noting any water leaks or obvious damage. The roof is inspected for tears or holes, loose tiles, weaknesses, and to be certain that vent pipes are sealed properly.
Appliances (i.e. stove and water heater) must comply with standards. If there is a propane or wood-burning stove, these must be checked for physical integrity and proper function.
Carpets should not show signs of inappropriate wear or water damage. All faucets must be tested for leaks.
In addition to these major aspects, your inspector may check a variety of other systems. You’ll receive a detailed report of his or her findings, and as the buyer you may use these defective items as bargaining chips during the negotiation phase. As a seller, this professional inspection may be done before listing, so that problem areas can be given attention before the property reaches the market.
Home inspection can be costly, but a few hundred dollars may well save thousands in the long-run, and there’s something to be said about peace-of-mind.
About the Author: Paulie Sabol, often called the ‘legal bank robber’ for his real estate financing and bank owned foreclosure investing, is a nationally recognized real estate investor trainer and financial thinker. Sabol, has personally completed 100’s of