Would love some advice! I'm about to purchase my second deal to either flip or BRRRR. This is a probate situation and the property, a townhome, is DEEPLY distressed from cat urine and filth.
Do you think an inspection is needed? We are in due diligence now. The reason I'm hesitant is the electricity has been turned off, and the smell of cat urine is so profound I can't imagine an inspector agreeing to spend much time in there. My go-to inspector has already said as much. I'm also budgeting to basically re-do everything.
I'm aware of all the drywall, subfloor replacement and priming needed. My thought was to do the inspection after that first phase so I have a better "punch-list" on the property then.
Thoughts? I want to make sure I'm approaching this the right way.
Hey @Sara C. ,
I always feel that if I have a deep enough discount or plan on renovating so much of the property all ready I can skip the inspection. However, it all depends on the numbers and also your ability to evaluate the items generally covered in an inspection. I also typically want the deal closed before anyone starts to change their mind.
Unless you plan on scraping the property, which you can't do in a town home, I would always get an inspection. Even if you do plan on tearing a property down and rebuilding, you still ought to take a look at the land, soil and sewage. There are other items such as water heaters, HVACs, electrical and plumbing that could be major issues even within a town home. I also rely on my inspector to tell me the quality of construction in the first place.
If you don't want to make it part of your contingency, you don't need to. Typically you lose your earnest money if you back out after your contingency period. I just don't know that I would ever personally not complete an inspection for any property. If your inspector is unwilling to go, I would find a new inspector.
I assume you have inspected it and you are just asking if you should go again with an actual home inspector. Personally I have never used a home inspector on a flip/distressed property. I gather any/all info I can during my walk through and then create my budget. What items do you want the home inspector to weigh in on?
Yep @Brian Pulaski exactly. I mean an actual home inspector. I've looked at it as best I can, but I'm no expert in home systems. However, I am getting a deep discount and am basically budgeting for all the big stuff like electrical updates, new HVAC etc. I appreciate everyone's feedback. I do think it would be hard to get an inspector in there with the shape it's in now.
I agree with your approach (though I don't generally recommend it for novice investors or those who can't afford a worst case scenario). If you are already budgeting for "worst case", then anything that actually works upon further inspection is a bonus!
I'm also somewhat more lax about inspections on condos and townhomes - if the HOA is responsible for the roof, structural, sewer, exterior, etc then that lessens your risk as well.
@Jeff Copeland good point about townhomes and the HOA being responsible for some of the big stuff. I appreciate your feedback. Thanks! Feeling better about going in without a formal inspection.
@Sara C. Have you verified through the HOA that the unit can be rented? Have you looked at the HOA agreements and financials? Are the HOA dues current? I think if you've budgeted for major items, have a clue about rehabbing and are buying at a good discount then maybe skip the inspection. I've been doing this awhile and always get an inspection. It's $3-400 well spent. I would be more concerned with the HOA.
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