Question for experienced rental property investors
I’m new to real estate investing and looking to buy my first rental property. I’m curious about how experienced investors approach the inspection.
If you find a property that:
- looks fully updated and move-in ready,
- is legally allowed to be rented,
- is in a decent rental area, and
- meets or exceeds the 1% rule,
how much weight do you personally put on the inspection?
Do you still get a full inspection before purchasing, even if the property looks great and the numbers work? Or do you mainly use the inspection to identify major issues that could change the deal?
I’m trying to understand what would make you walk away from a property after inspection versus accepting some minor issues and moving forward.
Would love to hear how experienced investors handle this, especially when buying properties in the lower price range.
Most Popular Reply
Hello Janel. I wish you well on starting your journey in real estate.
This is my take. As an experienced investor, I want to get a full inspection on a property that appears to be move-in ready. What appear to be fancy updates can hide defects that can impact your potential cash flow negatively. I see the inspection solely as a tool to mitigate risk and to negotiate down on price in the case of uncovered capital expenditures.
There are a learning and monetary costs to viewing the inspection as a tool to simply confirm that a property is “good.” Flipped homes can be notorious for cover-ups that hide structural foundation issues, mold, electrical, plumbing and roofing defects. If these are missed, the cost is extra time and money spent to fix what appears to be in a good and functional condition. That is time and money that have just added to the price of the property.