The inspection I do before I ever make an offer

General Real Estate Investing
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The inspection I do before I ever make an offer

James JonesPro Member
Investor · Collierville, TN 38017 · Member since 2017 · 926 posts · 637 votes

I do not make an offer off photos.

Before I offer on a single-family house in Memphis, I walk it with one question in mind: can this house get rent-ready and still hit my numbers?

First, the big systems. Roof, HVAC, plumbing, electrical, foundation, and any sign of water getting in. If two or more of those are shot, the rehab stops being a rehab and starts being a rebuild, and the math usually dies right there.

Second, the layout. I am looking for the conversion. Can a 2/1 become a 3/1? Can a 3/1 become a 4/2? That extra bedroom is not cosmetic. In the Memphis ZIPs I buy in — 38109, 38111, 38112, 38114, 38116, 38117, 38118, 38122, and 38128 — 3BR+ is where Section 8 rent works, $1,395 to $1,950.

Third, I run the numbers on the spot. I buy BRRRR single-family under $100K. I need ARV in the $180K to $265K range, rent that clears the 1% rule, and a refinance that makes sense on DSCR at 70-80% LTV. If it fails there, I walk, no matter how good it looks.

I never put earnest money down, and at 236 properties, deal flow is my bottleneck — not money, not contractors. So I inspect fast, decide fast, and do not chase a house that does not pencil.

What is the one thing you check on a walkthrough that will kill a deal for you every time?

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Randy Schell
Member since 2026 · 153 posts · 18 votes
1d

James, for me it was always water. A musty smell or stains under sinks and around ceilings told me more than anything, because it usually means something bigger is hiding behind it. I'd also check how old the water heater is and whether the doors and windows actually close right, since those are the things tenants end up living with.

Randy, Bunklow

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  • Vladimirs Veiss
    Developer · Riga, Latvia | Switzerland | Florida · Member since 2026 · 116 posts · 17 votes
    1d

    @James Jones thanks for sharing the walkthrough, James, and "I do not make an offer off photos" is the right rule. Honestly, we don't have one single deal-killer. The pattern we see most is the one you described, two or more systems shot, especially with a layout that can't add a bedroom: that's when a rehab quietly turns into a rebuild. But reading it right takes someone who has opened a lot of walls, because two tired systems can be fine if the price already reflects them. So here's a fun experiment :) Send one Memphis house you're looking at, photos or just the address. We'll ask you a few questions about what you saw on your walk, then send you our rehab range and resale estimate, and you be the judge of how close a remote read gets to your own numbers. Deal? Have a great evening!

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  • Ametria Chaney
    Realtor · Memphis, Shelby County · Member since 2026 · 207 posts · 69 votes
    1d

    James, "I do not make an offer off photos" is the golden rule right here — that alone puts you ahead of most buyers making offers sight unseen.

    For me, the one thing that kills a deal every time on a walkthrough is signs of water getting in with no clear source or easy fix. Stains on ceilings, swollen baseboards, musty smell in a crawlspace — water finds every weakness, and the repair bill is the part you can't see until you open walls.

    Everything else — cosmetics, dated kitchens, even a tired roof — is just math on a spreadsheet. Water damage is math with a question mark next to it. If I can't trace it and price it confidently, I walk, no matter how pretty the rest of the house is.

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  • Randy Schell
    Member since 2026 · 153 posts · 18 votes
    1d

    James, for me it was always water. A musty smell or stains under sinks and around ceilings told me more than anything, because it usually means something bigger is hiding behind it. I'd also check how old the water heater is and whether the doors and windows actually close right, since those are the things tenants end up living with.

    Randy, Bunklow

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  • Lauren CutchenBusiness Member
    Real Estate Agent · The Woodlands, TX · Member since 2019 · 199 posts · 81 votes
    1d

    @James Jones love the "no offers off photos" rule. Up here in north Houston and Conroe the thing I look hardest at is water: any sign it's gotten in, how the lot drains, and the foundation, since our clay soil moves a lot. Two big systems shot is usually a pass for me too, unless the price already reflects it.

    [email protected]832-406-4239
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  • Russell Cabus
    Atlanta, GA · Member since 2026 · 26 posts · 5 votes
    1d

    In addition to the above posts: From an operations perspective, I’d turn each finding into a property-specific task with photos, a responsible person, and a deadline.

    That will give PM a clear handoff after purchase and keep “repair identified” separate from “repair completed and verified.”

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  • James JonesPro Member
    OP
    Investor · Collierville, TN 38017 · Member since 2017 · 926 posts · 637 votes
    1d

    Appreciate all of these — water is the consensus, and it's earned. Untraced water is the one thing I can't price standing in the house, so it kills the deal until the source is found. @Vladimirs Veiss I'll pass on the remote-read experiment — the walk is the whole point for me. But you're right: two tired systems are fine when the price already reflects them.

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    • Vladimirs Veiss
      Developer · Riga, Latvia | Switzerland | Florida · Member since 2026 · 116 posts · 17 votes
      1d

      @James Jones totally fair, James. The walk is your edge, and no model replaces it.

      And the water point is the honest one: if you can't trace it, you can't price it. We work the same way. Everything visible gets a price, and anything hidden stays unpriced until someone finds out what it is.

      When water killed a deal and the seller later fixed the source, did you ever go back to that house, or is it a hard pass?

      Enjoy the weekend!

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    • James JonesPro Member
      OP
      Investor · Collierville, TN 38017 · Member since 2017 · 926 posts · 637 votes
      21h

      Vladimirs, not a hard pass — but the burden of proof flips.

      Yes, I have gone back, but only when I can verify the fix myself. I want to see what was done, who did it, and proof the source is actually gone — receipts, photos, a re-walk after rain. Seller says fixed is not fixed.

      Then I run it fresh, like a new house. It still has to buy under $100K, ARV $180K to $265K, rent $1,395 to $1,950 for 3BR+, clear the 1% rule, and the DSCR refi has to work at 70 to 80% LTV on a 30-year.

      If the water is still untraced, it stays unpriced, and I stay out.

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    • Vladimirs Veiss
      Developer · Riga, Latvia | Switzerland | Florida · Member since 2026 · 116 posts · 17 votes
      18h

      @James Jones thanks, James! "Seller says fixed is not fixed" is going up on our wall. A re-walk after rain is the one test nobody can fake.

      In old Latvian houses, damp basements and frost heave are the usual suspects. Termites are something we almost never deal with there, and from what I read, Memphis is a different story.

      Is termite damage something you catch on your own walk, or do you always bring in a termite inspector before you make an offer?

      Have a great weekend!

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  • Noah WrightBusiness Member
    USA, Nationwide · Member since 2024 · 320 posts · 119 votes
    1d

    Your conversion test is the smartest part of that walk, because the refi rides on it more than anything else. A bedroom only counts if the appraiser counts it. A conversion room with no path to a legal bedroom is a walk-away for me every time. That means no way to cut in an egress window, the only way in is through another bedroom, or the space is too small. If the report calls your 3/1 a 2/1, the comps and market rent come from 2BR houses, and most DSCR lenders size the refi off that appraised value and that rent. Closet and size rules vary with local code and with the appraiser, and then there are other things to check, like heat in the room and ceiling height. Have any of your conversions in those ZIPs ever come back as a 2/1 on the appraisal?

    [email protected]737-773-3717
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  • James JonesPro Member
    OP
    Investor · Collierville, TN 38017 · Member since 2017 · 926 posts · 637 votes
    22h

    Noah, it happens when the conversion is built like a room instead of a bedroom. That's why I add the square footage the way I do — 400 to 650 square feet, carports and garages converted — with the layout planned so the appraiser can count it: real entry, real egress, sized like a bedroom. If it comes back as a 2/1, the house misses the ARV band of $180K to $265K I underwrote, the DSCR refi at 70 to 80% LTV shrinks with it, and the rent drops out of the $1,395 to $1,950 range a 3-bedroom gets on Section 8. One uncounted room breaks three numbers at once. I check countability before I ever make the offer — after the appraisal is too late.

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