The high foreclosure market in recent years has spawned a new pool of novice residential real estate investors, people looking to cash in on low-cost, fix-and-sell properties. It’s a sound strategy, provided the investor does his homework before taking on a renovation project. That homework involves a long list of responsibilities, but few of those duties are more crucial than the property inspection. And that inspection should begin with a simple Senses Test.
Any investor’s first line of defense against taking on expensive investment upgrades is his own senses. Before bothering with an official inspection, a home buyer should rely on his own eyes, ears and nose as a way to red-flag potentially costly structural issues and property flaws. Here are a few things to be aware of during your initial walk-through.
A property blemish that should put fear into any investor are foundation cracks in its basement or crawlspace. Spotting them sometimes requires a trained eye, but other times they’re easy to identify. If, during a home tour, you notice foundation cracks, consider sparing yourself the expense of a trained inspector and move on to another investment opportunity. Repairs will almost always require hiring a trained professional, and costs can climb into the thousands of dollars.
An Aging Furnace
An HVAC unit well into its second decade of use should not be enough to scare an investor away, but it’s definitely enough to factor into the negotiation process. The cost of a new energy-efficient furnace and air conditioner is in the thousands, and since installation is not a task the typical investor can handle, those costs should be factored in as well.
All homes have their own distinct aromas, but if a strong, pungent odor attacks you when you enter, be cautious of mold and mildew that could signal bigger problems. Water damage resulting from a leaky roof or flawed plumbing can do major damage to a home’s interior if left unchecked for too long. If you detect a strong stench, follow your nose and find the root of the problem.
Another hint that water damage may seriously cripple your renovation project are small painted areas, particularly on the ceilings. Those could indicate rush cover-up attempts to hide walls and ceilings damaged by water. If you spot discolored wall panels, look closely at what lives above them to see if water damage is the culprit.
It often escapes people touring a property, but remember to flush each toilet to make sure they flush as they should. Slow-flushing toilets can indicate a backup in the main sewer line, which has the potential to cost thousands of dollars in underground repair.
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