When you are a newbie looking at the inside of a property for the first time what are the things that you should be looking for? :help
Approach it like developing a to do list. Take a pad and write down everything that would need to be done in order for a person to move into that house. Then look at that list and price it out. That will tell you if you should buy it or not. Remember any house can be made first rate but at what cost is the issue.
simple and sweet post by Bluemoon.
One tip that i have come across in all the material I’ve come across is that be sure to check your tastes at the door. I guess the operative word from Bluemoon’s post would be “Need.” What would need to be done? I recently have been reading a home inspection book and I am going to create a form from it to help me remember things. If you want, PM me and when i finish the form, I am more than willing to send it to you as well.
Good luck in your investing and Happy New Year! May this year be a prosperous one!
Thanks Bluemoon and Rogelio for your responses. I definitely like the to do list approach. I will defintely PM you for that list Rogelio.
My advise will cost a few bucks, but I believe it is the best thing to do. Doesn’t matter if you are a newbie, or you are have done some houses, do a professional home inspection. Now I’m only assuming that you are asking the question because you plan on wholesaling it to someone else. For the sake of discussion, lets say that’s what you plan on doing. If you plan on wholesaling that property, and you got a home inspection done before actually handing it off to the wholesale investor, that investor can’t pick apart the property and try to get more of a discount. When I first started investing years ago, I couldn’t afford an inspector and at the time I was wholesaling a house that needed a bit of work. It was really troubling at the time when I went through a house, estimated the repairs (even over estimated), and still 1/2 the guys that came over said it needed 20,000 in additional work and asked if I can discount even more. If I had a home inspection report right there with me, 100% of the guys in that situation would take that and not try to screw my out. I eventually sold that property for what I wanted. The point though that home inspection has so many benefits and in my opinion is a selling feature for you. Some guys will come on and say protect yourself by putting in the necessary clauses. I think that is BS. My house today sell FASTER just because I have that home inspection in advance. And I’m a guy who knows what to look for.
I don’t want to make this a Bluemoon / Rogelio love fest but Rogelio is right. Remember that the goal is to provide a place that is clean, functional and safe. Not the Taj Mahal.
Thanks chunkoftheearth! I’m actually trying to do a buy and hold with this property. Your right though having a home inspector come in is probably my safest bet. I had a home inspector come with me to look at another property once before and he was really good. Once the home owner saw that they weren’t going to get what they thought they backed out. That was the best and the worst $450 dollars I ever spent. Paying $450 dollars each time I see a really good deal doesn’t sound cost efficient to me but maybe that’s the nature of the beast being a newbie real estate investor.
Bluemoon06: I understand exactly what your saying. I think when your a newbie sometimes you want to fix a place up to your standards even though you don’t plan to live there.
I wish someone would do a home inspection crash course for newbie real estate investors so that we know what to look for.
I have to say, great post Chunk. Very well put and strong points.
I just can’t see spending the $400+ to have an inspection done on every deal I look at. That’s why i choose to educate myself on the general stuff so that I can (hopefully) eliminate all the marginal deals and focus on the great ones.
In your post, you stated “I’m a guy who knows what to look for.” May I ask, how do you know what to look for?
NOTE: that question sounds a bit sarcastic when I read it, but i don’t intend it to be. I really would like to know how you are able to know what to look for?
I am currently immersing myself in a couple inspection books and doing as much online research as I can. I’m working on a simple form that will work quickly and easily. i figure, do all the hard work now and then I don’t have to waste so much time later. LOL. It’s going to take a while, but when it’s done, I’ll gladly share it.
NREI,
You’re right about many newbies wanting to over improve a rental property. I had the same feelings when we started investing. I still like to make our places as nice as we can within our budget, but I don’t try to over improve them. Clean, safe, and functional for rentals is the way to go.
I actually still struggle with that. We recently purchased a place to live that has an outbuilding that we are planning to turn into a rental. It needs some modification before we can do that, but I found myself trying to turn it into a place that I wanted to live in rather than seeing it for what it was, which is supposed to be a safe, sound place for a tenant and an income stream for us.
I actually spent almost a week coming up with many different ideas but I finally realized that, no matter what, after the property is in a safe place, the income is basically at it’s peak. Any additional improvements are not going to increase the rent enough to justify the added expense. basically, whether I spend $2k or $20k, if it’s a one bedroom, it’s not going to bring in any more than $500 to $600 per month.
I know what to look for nowadays just based on experience. Doing the same thing over and over again, and you’ll get their too. While I think reading is important, getting out there and getting HANDS ON experience is superior. Now I want to expand a bit on what I was saying about the home inspection thing. I’ve been doing business since 2005 or so. I don’t do an inspection on every house. For example, I’m working a deal today on a 4 year old house. I don’t see the need for a home inspection at this point in advance because common sense says the likelihood of something being majorly wrong with a house like that is unlikely (but not impossible). I think the key is to use your judgement. The benefit in the begining stages of your career in this business in doing an inspection in advance like that if you intend on wholesaling it as I said goes beyond the obvious passing of the inspection itself. For example, me personally, when I get an inspection done to this day, I make sure I follow my inspector Darren around the house. Him and I inspect it together. So I shadow him. Now years of that shadowing doesn’t make me an inspector, but it gives me confidence for when I go to the next house in the begining to meet homeowners that first time. Confidence in knowing what to look for. Second, after a while when the inspector knows you and you use him a few times, you get a much better rate. After a while, the inspector won’t be an absolute as you can see because you’ll be able to look for things. Look at it this way, the buyer will do the inspection if you don’t. But, if you do it before they do, they may opt to not do one. I sell faster this way, and I can’t remember the last time a buyer of mine actually did another home inspection after seeing my guy’s report already in plain sight. But I think there is a benefit to using this strategy I brought up for newer investors for the reasons I mentioned. This business you make money when you sell. I like selling as fast as possible. Inspections allow me to also find out if there are faults with the house IN ADVANCE, which if you think about it will also give you an advantage when still dealing with the sellers. You can go back and re-negotiate even further down in price. So many benefits. As to the money thing with doing multiple inspections on houses I would leave this for you to consider. Maybe if you’re thinking about losing money like that, it’s probably not a house you want to waste you’re time putting under contract, right? You for sure can sign the contract with the seller and let them know you will do an imediate inspection the following day or two, and as long as they are honest about the defects then you will honor the price you all talked about, but if your guy finds defects then you deduct accordingly. That way you are protected as you have a signed deal that is locked in, but you can still get out if needed (with the right clauses). This is what I do nowadays. Now, Rogelio makes a point that I don’t disagree with. For sure you can do your own inspections. But I look at that 2 ways. First, with everyone I deal with in this business (lawyers, mortgage brokers, inspectors) when I first interview them to consider adding them to my professional team, I want to make it known to them that a phone call from me means BUSINESS is coming their way. So for example, it’s possible for me to do my own title searches for $8.00 on my own where I live. A title search at my lawyer will cost around $80.00! Big difference. However, it is possible that I will miss something and make a big mistake that’ll cost me much more than that which is important not to make mistakes regarding title searches on something like a Sub2 deal. But mostly here I want to give them business because it’s good for my business. They then look at me as a fellow business guy who tries to help them. Nowadays my inspectors and lawyers etc send business my way which in turn cuts down greatly on my marketing costs. So if you think about it that way, that lead they send that turns into a sale is much more then the couple hundred you will save doing it on your own. Again, not saying Rogelio is wrong though. My 0.02
Great information chunkoftheearth! You rock!
most people give preference to
better location
furnished, availability of basic facilities and most important kitchen and bathrooms.and better condition of home
This has been a most elightening thread (yet again. LOL)
Asmayameen, you bring up a good topic. I hope you can find the time to repost and continue the discussion here:
it would be a pleasure for me to join u people there. definitely i will :smile