In my last post I wrote about due diligence and evaluating deals.Today I want to continue by sharing with you some of the things I look for when I do a property inspection.
(Note: You should always get a professional building inspection done by a registered building inspector, as well as a pest inspection from a pest inspector before you go unconditional on a purchase… but these insights could save you some time and expense on bad deals by revealing some common problems early.)
1. Check the Paintwork
One of the most simple and inexpensive changes you can make to a property to instantly increase its value is to give it a coat of paint.
I heard a story recently where an investor purchased a property, and set about giving it a coat of paint. Two weeks later, someone offered $75,000 more for the property than what this investor bought it for. That’s a $75,000 profit in 2 weeks!
Of course not every paint job is going to give you this kind of result, but it goes to show the significant difference a coat of paint can make!
2. Look For Obvious Things Which Are Missing
It sounds almost stupid to say, but check the obvious stuff.
Like if a property is advertised as having 3 bedrooms, check that it’s got 3 bedrooms. And make sure there are no windows, doors, walls, or roof sections missing.
Again – it sounds stupid that I would even mention it, but I used to know one particularly successful investor who bought a house which only had half a roof!
The silly thing was she inspected the property – but just never made the effort to walk out to the backyard to make sure the property was OK from the rear.
Needless to say she was pretty upset about the experience – after all, roofs don’t come cheap!
So even though it sounds silly, I mention this because I would hate to see you make the same mistake.
3. Is The Property Attractive To Potential Tenants?
When most investors buy real estate, they look for a house which they’d be happy to live in.
The truth is you don’t need a house which YOU would be happy to live in unless YOU plan to live there. You only need a place where someone else would be happy to live.
When you’re doing your inspection, does the house feel damp, dank or dingy? Does it have a bad ‘feel’ to it?
If something doesn’t ‘feel’ right about the property, it’s likely that whatever you’re feeling about the property a potential tenant will feel too – and as a result, they will be unlikely to rent the property for you.
4. Check The Fireplace!
Here’s a simple trick which I learned from a renovator friend.
If you’re looking at investment properties which are more than 40 or 50 years old, most of them will still have their original brick fireplace.
If so, have a close look to see if the floor sinks away from the fireplace.
If the floor sinks away from the fireplace, you have a clear sign that the foundations have sunk, or that the property needs restumping.
Sinking foundations or bad stumps can cause future structural problems with the property, and restumping can be expensive – so watch out!
5. Get Down and Dirty
Most people are happy to walk through the property on the inside, but they don’t get underneath the property to look for obvious signs of potential trouble.
I find it’s worth grabbing a torch and a pair of overalls and getting underneath the property to have a look.
Check for signs of dampness or flooding such as rotting wood as well as signs of a termite infestation such as flaking wood or fine wood dust.
Of course you should always get a pest inspection before you sign on the dotted line, but spending 5 minutes with a torch under each potential deal to my own inspection has saved me plenty of time and money, and has helped me to quickly weed out a lot of dud deals.
In my next post, I’ll be concentrating on some of the pointers to look out for when you’re walking through the property.