Property first on-site look - code violations - how to get educated

6 Replies

Hi BP gang!

I'm still a few months out from jumping in so I am in all out research mode.

I convinced my wife to go to our first open house on a 2 family today and it was kinda scary!

Not scary as in we were in danger, but scary in what the current homeowner/slumlord has done as "fixes".  The property had been owned for 30 years and my wife and I aren't experts, but we were pretty sure 1) it wouldn't be up to code and 2)There could be some pretty serious damage hidden.  For example, there was an extension cord power strip that was spackled into the wall,  the front facade was good, but the siding all around the rest of the house was so bad, we could poke through it in places, and the list went on.

So my question is several fold.  

Do you have a property checklist that you use when going over the physical aspects? 

We have a mental one, but having a form to make sure we don't miss something is good.  I know that there is an inspection phase, but, really, if it's not worth our time, I want to know before we get there.

Where do I go to get educated about building code in the area and what is required for a certificate of occupancy? I know that the town that I live in doesn't require a CO, only a fire cert.  I don't need to be an expert, there are experts for that, but I do want to be able to spot some major issues before they turn into major $.  I am expecting some boring reading in my future.

What do you look at as an acceptable amount of work that needs to be done?  Since we are newbies, we are basically looking for almost turnkey - a property that may need some work but is currently rented and the #'s work.  Is that unrealistic? 

Overall, it was a really great reality check.  We plan on checking out several more just to get practice evaluating a property.

I think that the "power strip spackled into the wall" is my new 1st rule of instant elimination.

At least for me, who will not be wanting to do significant renovations/repairs. I am about to close on a Duplex, and saw another one built at the same time, just one street over. Boy, were they night and day! The second unit, with an asking price which was higher than mine, had major issues, both cosmetic and structural.

Keep looking, you will find something. What area are you looking in?

I’ll say up front I haven’t made the leap into my first property but I’ll give the best info I can from my 8 years of experience as a city building inspector and plan checker in the state of California.

A checklist is a great resource when starting out otherwise it’s easy to get overwhelmed. It gives you a nice system for looking at a property and It also helps so you can make notes and estimate repair values. There’s quite a bit you can learn just by physically looking at the property, and when something looks wrong it usually is.

For occupancy I’m typically looking at fire/life safety concerns and non-permitted work. If materials are so rotted that you can poke through them that’s a real concern for the structural components within. Also permits on property are public record and usually available to view at the city building department and in some areas are available online. You can also check for any open or past code violations/enforcement actions, sub-standards, or liens placed by the city. Building departments also often have a lot of handouts and informational material they can provide so i would see what information you can get while you're down there as well. 

The codes can be extremely convoluted so if you’re looking into easy info or a cheat sheet type deal on the building codes I would recommend checking out code check. Tons of inspectors use these as their “shortcut” or as a type of checklist for common violations. They have great illustrations and are just simple and to the point. They’re maybe like 40 pages. If you’re looking at a water heater you can flip to that page and there’s an illustration and list of the standard requirements. Their website has sample pages to view.

As to the rest of your questions I'm sure they'll be answered by more qualified people than myself.

Best of luck,

Ken

i have a few of those code check books/phamplets. They are pretty good & easy to understand. Also get DIY network (sorry for plug) & especially watch holmes on homes (&his pain offs). Water damage & electrical & aspestos. I dont know of a good checklist, would like to see one too. Maybe start writing one up?  Start with structure, fire, water, gas, electrical, foundation, roof, windows, plumbing, floor, walls. Im sure there is more. Break each above & spend some time in each area. 

If there is a extenion cord into the wall, wow, what else is hidden you cant see?

pain offs =spin offs. (Sorry)

Great tips & input Pat McGrath, Scott Weaner Ken Fields - thanks for that pamphlet info!

I was also wondering how tough people are on the realtor? The guy showing us the place definitely knew more than he was telling us and we decided that it wasn't worth our time pointing out ALL the problems, but it was tempting. He seemed pretty proud of his handywork

The rule should simply be - if you wouldn't live there....don't invest there! We buy all kinds of properties with our JV partners and, for us, if I wouldn't spend a night there comfortably, we just move on. We buy some pretty scary properties in terms of conditions but we do so at steep discounts and we are vertically integrated as contractor and leasing/managment so it works for us. Sometimes, we even get bit though. We have a property where we budgeted for some electrical repairs but the city changed the building codes and is now requiring us to completely rewire with new meter base and panel. We dragged our feet a bit hoping to get around it but have now bitten the bullet and will rewire. You can follow the project on groundfloor.us if you wish.

I'll have to search through my files to find the checklist we used to send to investors/homebuyers.  This one provides a pretty decent scope...along with the comments of one poster.  Whenever you look at a property, you should be able to scope it out thoroughly on your own before retaining a home inspector.  Thoroughly vet the inspector and make he isn't just a rubber stamp for the real estate agent....most usually are.....if they kill the deal, the agent doesn't get paid so the incentive is to go light on the inspection.  I see a ton of these every week and you wouldn't believe the major things many of these inspectors miss.  This inspection scope is a decent place to start - http://www.realestate.com/advice/homebuyers-red-fl...

On older properties, especially multi-fam, be on the look out for unpermitted additions or changes.  Something like the electrical here is a huge reflag of what might lurk beneath the surface.  A ton of owners will either do their own maintenance or hire the cheapest to do so....long term, that can spell huge costs for the new investor.  If the power has been off for a period of time, check with your local electric company or code office and see if they will require an inspection before they will restore power.  That is the case in our property.  When it was a single family rental, the tenants there pried up the meter base so many times to steal power that they damaged the box.  The power has been off for more than a year so we are required to get an inspection before we can get the power back on...hence our now having to rewire the entire house!

Bear in mind that even when you hire an inspector....he won't look at every nook and cranny of the house you have in mind.  Anything of a serious structural issue...like the retaining wall on a driveway recently posted here....requires a structural engineer to determine scope of repairs which you can then use to bid.  There are tons of little things to look for....window or door trim set flush with the siding...usually means someone has installed another layer of siding over the old siding.  We have that one a home HandyANDy is working on right now.  Push on aluminum siding or trim to "feel" what's underneath, if it gives, it's usually a sign of rot.  Look for black on the house....it is almost always a sign of rot, failed caulked, raised shingles or vent boots or the sort.  Look for what appears to be a wave in siding or trim...it too usually indicates rot.  Tons of things to bear in mind but we often find that if we address as many of the issues as we can upfront, we're able to purchase properties that others won't touch.  Happy Investing!

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