I’m working on purchasing my first rental property. Ive been focused on purchasing a duplex in the Woodlawn a Chicago neighborhood. It’s with a 10 minute drive of where the Obama library and Tiger Woods golf course is anticipated to be built in the next 5-6 years. I know the area is a bit dicey and the building are older so many of them will need work and aren’t in the best condition. I’m working this while on military orders so I need to trust my realitor but the last couple of deals I’ve been contingent on have fallen through due to the building not being structurally sounds, but this is only after the home inspection has been paid for. I asked a contractor to look at the home inspections to get a better idea of the issues within each building. The contractor indicated that the issues with the properties are obviously and that I didn’t need to pay for a home inspection to see the major external issues or the piping issues.
My question is, do I need to find a realitor with more experience or am I doing to run into this problem because of the location I am looking in?
Should I look into a different state or town? Thank you in advance for any input!
I'd get rid of the realtor. They are supposed to be your eyes and ears, as well as your mouthpiece. I would also consider partnering with someone in the area you want to invest in, so you have boots on the ground.
I agree with Joe. Get a better realtor. If they are obvious, the realtor should know enough to pick it up. See if you can find a realtor who works with investors or has a construction background.
I concur as well, get a new realtor. As explained, these are items that could easily have been identified to you PRIOR to you paying for any inspection or even locking up the deal!
It may be the wrong kind of realtor too. You need one with an eye for rehab and structural issues. They don't need to be an expert of course, but they need to know when it's a problem and an expert needs to be consulted. They should be able to give you a decent idea of what needs to be done, what major issues there are or might be and what the approximate cost should be. Many agents that work predominantly with homeowners aren't particularly good at that.
Or the agent just might not be very good. That's possible too. I would look for a new agent.
A realtor isn't an inspector nor a structural expert - and most contractors are not either. But having said that, there are properties that are prone/known for structural deficiencies due to age, construction, and location. Realtors who work in those markets - and with investors and builders - know what to look for and when to run before spending a dime on inspections. If you're looking to buy in "challenging" markets, you need a realtor who works with investors in that and similar markets. Don't blame the realtor for getting an inspection - that's watching your back. An inspection report is a lot cheaper than structural repairs. But if you chose the wrong realtor based on expertise, that's on you. Interview a realtor like you would any other trade or professional to assess their knowledge and experience. And, this is your business; running one isn't something you turn over to someone else to get started. I appreciate your service to our country; it's a big deal - but you have to value your time and money to be successful. Rethink the target market; choose your resources accordingly.
I am guessing it is the agent. Without knowing too much about the actual issues, it is pretty rare an inspection points out something I didn't tell the client about. Reach out to @Ronan m
@Ronan M. as he does that area and owns 50+ units
@Anna Gordon it is most likely a combination. You may have a regular residential agent who lacks experience, but you also may be looking at this through the eyes of a spread sheet. Make sure you are focusing on buildings that are well constructed from the start. You can normally spot issues with these older Chicago brick buildings from google street. If you see laddering (bricks breaking along the mortar lines), bricks leaning, tuck pointing missing, bad porches, etc then you can skip the property. You can normally scope a property out on google streets pretty easily in Chicago. Check from the alley way to see the back porch. Check the roof on there as well.
As Brie mentioned, I would connect with @Ronan M. He is an experienced investor who has had to deal with building issues before.
I understand the frustrations and cost of paying for home inspections on deals that do not close and while your issue can be mitigated with an renovation knowledgeable realtor that individual will never represent your interest like you so that makes it very difficult to do remotely but not impossible. While this is not the best solution one thought is to get someone local who is able to walk with the realtor and facetime with you at the same time. If the person is knowledgeable about renos great. I would give them a checklist and the prior inspections to help them know what to look for. Everyone always says a good home inspection will save you from buying a bad property but they add up over time and eat away at your capital especially if you do not have those type of reserves.
@Anna Gordon - First off, thank you for your service, and congrats on getting offers out there and taking action.
It definitely initially sounds like it may be worth at least talking to another agent. Structural issues can be tricky, however, most agents that have been working with investors have seen enough of these types of issues to identify them prior to an inspection. Try linking up with @Tony Freeman he works with a bunch of investors on a regular basis and some are out of state like yourself.
At the same time, at least you have a good inspector on your team that is advising on the major issue with these properties. Definitely stinks to pay for the inspection, but that's pennies compared to the trouble you'd have if you moved forward on a bad deal. - something to be grateful for - for sure.
Thank you all for your professionalism, time and insight. I am grateful to have the space to inquire and receive information from experts and professionals such as yourselves! Although, I have decided not to pursue the property that was contingent, I have learned a lot from this property. I am also looking forward to connecting with suggested contractors and investors! Thank you again!
I assume the realtor is visiting the properties on your behalf while you're on Military Duty. I'm going to submit it's not the realtor or the area. It's your strategy & potentially lack of patience. Woodlawn, as with most of Chicago, has buildings that are 100+ years old so you have to go into deals with the expectations that you're going to have to fix something major. But if you get the deal at the right price then the After Repair Value will more than make up for what you may have to put in. Expect deals to fall through.
Regarding inspectors- If you have a contractor on your team then stop paying for inspectors. Unless the inspector is a structural engineer I would discount anything in his report. If you go into this with your eyes wide open, stop paying for inspectors. Pay the contractor on your team to give you an idea of what it will cost to get the building rental ready.(Note: We only use inspectors for owner occupied deals with clients. We rarely use them for our own deals)
You are playing with fire. You will get burned
You are only seeing the tip of the iceberg you are moving toward. You are trying to buy older buildings in a tough neighborhood sight unseen. You are not just having to trust your realtor...and you are learning how difficult that is
You are having to trust a contractor who you don't know and they Do Not have your best interest at heart. Good luck with that.
You are having to trust the inspector. Do you know they are any good? You are going to have to trust property managers. Do you know any good ones here?
What are the odds you happen to find all great people right off the bat...not being local? You already know the answer to that with your realtor experience.