Six Reasons To Always Do A Home Inspection
Today's market is driven by foreclosure and short sales.Most buyers believe they're getting a good deal because they're buying "below market" and most sellers, in particular the lender or receiver if the home is bank owned, insist on selling the home "as is".
Because of this "good deal" perception a lot of home rental investors are tempted to skip doing a home property inspection, thinking that since the price is low enough, there will be enough money left over to do what ever repairs are necessary.
Not doing a home inspection on any real estate investment home is one of the more foolish decisions an investor can make.
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Just because a seller says the property is "as is" and just because you may think you're getting a good deal on the price, and focusing more on how to lease your home, please, please, please do a home inspection so that - at the very least - you know what you're getting into.
When you’re buying a property it’s easy to get caught up in the excitement of soon-to-be ownership and skip dong a home inspection.
No doubt there are great marketing ideas in the works, leasing & management plans, and some ideas for increasing cash flow that you’ve been dying to try out.
It’s all too easy to forget about some of the boring nuts-and-bolts documents that will help your property management and leasing go much smoother once you own the property.
Let’s look at some of the recent issues we faced with property under management:
- A parking lot driveway shared with the property next door using a hand-shake access agreement
- A winter-time water leak from old copper line run on top of a roof that nobody knew existed, with the leak first attributed to melting ice
- Roof tiles falling from a two-story building during mild wind and rain
- Decorative artwork on a three-year-old building popping off and falling to the sidewalk
- Assuming that a “grand fathered” or non-confirming use of a space by the former owner would be allowed for a new owner
- A new owner believing that it’s superior property management skills would be able to bring past due tenants current on their rents
That is, the new owner’s failure to do a home inspection and gather all due diligence documents before closing the deal.
When a new owner believes it is getting a good deal on a property, that belief often manifests itself with the owner thinking that he’s a good negotiator and that all problems can be solved with that skill.
So, the details of the deal get over looked.
A home inspection that covers electrical, plumbing, lighting, ventilation, and landscaping – verification of existing zoning & uses with the governing municipality, architectural blueprints, certificates of occupancy, construction permits, original leases & the tenant background checks to back them up - are some of the documents that should be gathered prior to closing the deal.
In all of the above cases, having these documents would help to allow a property sell faster, reduce the monthly water bill, determine whether a construction defect was at fault, save a tenant’s business, and help to determine a fair price for the property being purchased.
Always do a Home Inspection
Many savvy investors in homes for rent have actually told me in conversation that they thought that because a lender was selling the home and that it was sold "as is", that they didn't have the right to do a home inspection.
Granted, a seller doesn't have to agree to do any needed repairs. But normally a buyer of rental homes, or any other type of real estate investment, has the right to walk away from the deal at this point, if that's the path they choose.
No party involved in the transaction wants to see a deal fall apart, but that's not a reason not to do a home inspection. Even if you decide to proceed with the closing, at a minimum you've been advised of any issues the investment home may have.
Jeffrey Roark
Property Management Training
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