Dear Bigger Pockets members,
I am a new buy and hold investor who is currently looking for her first deal. I have been looking at townhouses in turnkey condition in Baltimore, MD, that were built between 1900 - 1950's, but renovated. While most of those houses look good optically, I want to make sure I understand the systems in the house that are not as easily visually assessed for somebody who is new to the game.
What should I look for in the heating, cooling systems, electrical and plumbing (I have heard galvanized pipes are something to be careful about) while looking at a house for the first time.
I am trying to lower my risk of having costly repairs and some guidance from experienced investors who know Baltimore would be very helpful.
Well first in Baltimore city they are generally called row houses not town houses . There is way too much to look for than someone can write on the forum . Location is the key factor , after that , pay a home inspector or a knowlegable contractor to look at the property
First off how much you looking to spend?
I would hire an inspector / contractor to do your review for you. There are so many items that you want to look for and it truly varies but the typical items of age of systems is one item.
Why are you looking at units pre-1950 as well, you can get newer townhomes and not worry about lead paint and asbestos
It will be hard to generalize what to look for. Your best bet is an inspector.
You can do a quick check of simple things like (i.e. HVAC turns on, water runs okay) but that information will only bring little weight. An inspector can give you a list of items that need to be repaired/addressed. From there you will then need to reach out to several contractors to get bids on how much a repair would cost.
@Sarah Kuppert First, welcome to BP. Yes, I agree with the above get a contractor.
In addition to that, what is your investment personality? Are you looking for A/B/C class rental properties and exactly where in Baltimore? (in the City or County). These are some of the questions you might want to consider.
Start to think about what you're looking for? Are you looking for appreciation or strictly (always go with Cash Flow).
To be totally honest though the structural elements in the townhome or row houses are very important, the goal is trying to find an asset that matches your personality and satisfies your investment goals.
Hope this helps. Feel free to reach out for more questions :)
Good luck. - Ola
I'll never buy someone else's rehab again. Nor will I buy one that is not lead free or that I don't make lead free as part of my own rehab. You never know what kind of crap is hiding under someone's rehab.
Plus, if you don't do the rehab yourself then you don't get the benefit of that portion of the equity increase.
@Sarah Kuppert I know you have been to @Mark Owens lunches. Sometimes he or his friend Denise will show a house nearby they are working on or just finished. Take any opportunity like that you can. Ask them what they changed and why.
The inspector is a good idea. Make sure you are there to watch, to see what he is looking for. Also there are some good books on inspecting a house. One that I liked was Inspecting a House by Carson Dunlop and Associates. Readers digest put out a book called The Complete do it Yourself Manual.
Here are a few tips, See how many amps the circuit breaker box is. 100 amp can work if it has gas heat and appliances but 150 or 200 amp is better. Some of the old houses have 60 amp boxes. That is too low and probably means the wiring is old too. You can always upgrade the service (electric box) later. Changing wiring later is big more money, it means tearing up walls. If it is the old type of screw in fuses, that is bad. Tenants can put quarters in instead of fuses which would be an obvious fire hazard. If the house has a Federal Pacific circuit breaker box replace it. They are no longer made and are a fire hazard.
I make sure the house has grounded electric sockets (three prong) But you have to make sure they are legit and not a 3 p prong socket use on a two wire system. You can buy a little tester at home depot for about $5. Section 8 inspectors use them every inspection.
Yes galvanized pipes can clog. I have replaced some and it looked like it was stuffed with rusted steel wool. An easy test is go upstairs and turn on the water and check the water pressure. But at some point galvanized pipes may need to be replaced.
Lead paint is an issue in the city because of the old housing stock. Houses built after 1942-1945 tended to have little or no lead paint inside as they knew of the risks back then. A lead inspector like LeadProbe or LeadTec can help you. They can do a lead paint consult.
@Ned Carey gave you a very good response! I actually didn't know about the tester for the sockets. I'll need to add that to my xmas list. :)
Many times, the pipes will be updated visually, but galvanized behind the walls. Many old homes have galvanized pipes and people just live with it. You may notice some brown water when you first turn on a faucet.
Definitely do an inspection and if knob and tube is throughout the house, I would walk or make your office price way low. That can be very expensive. I was quoted 20k to replace knob and tub in a 2000 sqft home.
@Nicole B. good point about the pipes sometimes only being replaced where they are visible and easy to get to. This happens with Wiring also. That estimate for rewiring is probably triple what an investor should be able to get it done for.
Sarah, If you'd like to come see a full renovation of a Baltimore rowhome reach out to me. I"m working through another one we'll be adding to the portfolio and doing it entirely from scratch (new plumbing, electrical, HVAC, etc). Always happy to meet new investors and help where we can.
You received very helpful tips.
I want to recommend you a book.
Estimating Rehab Cost from J. Scott
You can get an online copy which comes with another book on how to find houses and couple of excel sheets for a rehab. It gives you pretty good idea on what to look for in each house and pricing info.
It could help you to understand parts and sections, what to look for etc.
If you read that and go to a couple of rehabs to see what they are doing, you will have pretty good idea.
Rest will come with experience.