How do you look at a house? Investor eyes?

General Real Estate Investing
7yFollow

How do you look at a house? Investor eyes?

Sam Rockafellow
New to Real Estate · Grand Rapids, MI · Member since 2017 · 8 posts · 0 votes
IN the Marine Corps I studied what is called Combat Hunter. We took hours of classes on how to identify human existence while patrolling though rural terrain. We learned how to identify many things about the enemy. Figured out how many people walked through that area, whether they were walking with or without a load. Identifying anything that would help us in the fight that we were walking towards. We had trained eyes. I get a similar feeling when I'm walking through a possible investment opportunity. Not so much the threat of violence, But the opportunity to learn as much as possible about a property before I take on the burden of ownership. I am a newbie and have 0 investment properties under my belt but I have walked through 10 properties in the past 2 months and realized I'm looking at it with untrained eyes. My question to the bigger pockets community is How do you get trained investor eyes? Do you have a system or a strategy in place for when you walk through an investment property for the first time? Do you have a list of questions that you ask every agent that is showing you the property? Do you walk around the outside 1st and look for structural issues or do you go right inside and see the status of the flooring and walls and kitchen? To give more of a visual of my question my primary focus right now is SFR's and I am located in Grand Rapids Michigan Thanks in advance -Sam Rockafellow
0Reply
15 views

Most Popular Reply

Jim K.
Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
7y

@Sam Rockafellow

This is an excellent question, but I suspect it's different for everyone. There is way, WAY too much to elaborate on here. But, as a DIY landlord and renovation contractor, I am always checking to see how structurally sound the property is, how much work it's going to take to turn it into a functional rental, and what obstacles lie between what the property is and what I want it to be as a rental. My typical path through a property is going around outside, then down into the basement, and then up through the house slowly with extra time spent in the kitchens and bathrooms.

An agent or wholesaler intent on selling you the property, however, will often have a pre-planned route through it that points out its strongest features first, and only then proceed to the weaker features and major problems.

You acquire the kind of reading skills you're talking about, and to a great degree, only over time and with experience. Don't rush it, don't fake it. It comes slowly and with great effort.

Invariably, you are going to meet a lot of people who most definitely ARE faking it, especially agents. Except for a very small percentage of them, agents are the biggest poseurs and BS artists in real estate. The ones that aren't have been in the business for decades and were usually employed elsewhere in some capacity associated with real estate before they became agents.

To help the process along, what you should do is find an experienced real estate investor who's been doing what you want to do for awhile and follow her or him through a property. Hit the local meetups. Make connections. Ask if you can tag along on walk-throughs. Lots of us just love hearing ourselves talk. I am absolutely no exception myself.

3Reply
See this reply in the discussion

7 Replies

Jump to latestLatest
  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    7y

    @Sam Rockafellow

    This is an excellent question, but I suspect it's different for everyone. There is way, WAY too much to elaborate on here. But, as a DIY landlord and renovation contractor, I am always checking to see how structurally sound the property is, how much work it's going to take to turn it into a functional rental, and what obstacles lie between what the property is and what I want it to be as a rental. My typical path through a property is going around outside, then down into the basement, and then up through the house slowly with extra time spent in the kitchens and bathrooms.

    An agent or wholesaler intent on selling you the property, however, will often have a pre-planned route through it that points out its strongest features first, and only then proceed to the weaker features and major problems.

    You acquire the kind of reading skills you're talking about, and to a great degree, only over time and with experience. Don't rush it, don't fake it. It comes slowly and with great effort.

    Invariably, you are going to meet a lot of people who most definitely ARE faking it, especially agents. Except for a very small percentage of them, agents are the biggest poseurs and BS artists in real estate. The ones that aren't have been in the business for decades and were usually employed elsewhere in some capacity associated with real estate before they became agents.

    To help the process along, what you should do is find an experienced real estate investor who's been doing what you want to do for awhile and follow her or him through a property. Hit the local meetups. Make connections. Ask if you can tag along on walk-throughs. Lots of us just love hearing ourselves talk. I am absolutely no exception myself.

    3Reply
  • Sam Rockafellow
    OP
    New to Real Estate · Grand Rapids, MI · Member since 2017 · 8 posts · 0 votes
    7y
    @Jim K. Love the feed back, the first property I looked at I wanted to apologize to the lady that showed me the house. I looked at nothing important and felt like I was just walking around aimlessly. I think it was nerves because the next couple I was able to pay mor attention and act on the thing I have learned in all of my research. I'm sure just like anything else with more experience I will spot things that wont be apparent to the common eye. I'm a person of systems and processes and curious of not the perfect process, just the ones that have worked for others.
    0Reply
  • Paul LeasonPro Member
    Realtor · Grand Rapids, MI · Member since 2012 · 172 posts · 70 votes
    7y

    I can only suggest partnering with a good realtor who has investing experience.  That’s how I learnt 10 years ago.  The first realtor didn’t have a clue and pointed and said “that’s the kitchen”!!   No way?!!!  

    The 2nd realtor I hooked up with was looking at structure, layout and was talking reno costs, ways of changing the layout to add a bedroom to add value and income.  I learned so much from @wes 

    @Wes Emert and now with multiple properties, rehab, rented, Flipped and wholesaled, I do my own walk through inspection and offer on properties as-is, where-is without a formal inspection.  

    With my clients I highlight the good, the bad and the ugly and offer my opinion of the property and whether it would be a good rental and also look at exit strategy further down the line.  

    The list to look for is extensive: mechanical, electrical, plumbing, structure, layout, terminate damage, mold......

    Can only be learned over time and after viewing multiple properties with and without issues.  

    616-717-1901
    1Reply
  • Amanda G.
    Rental Property Investor · Augusta, GA · Member since 2017 · 825 posts · 278 votes
    7y

    I like the question. I'm still fairly new to this process, but I've walked over a 100 houses, which has given me some confidence.
    One way of thinking about it is the big dangers vs the annoying bits. With a first walk through I'm more concerned with risks than benefits of adding rooms/baths, etc, because I'm looking for buy and holds not short term flips.


    Biggies (for me, other people will have different lists): foundation issues, roof issues (look at the roof itself and any signs of water damage on ceilings and walls), mold (beyond a little where things need fixing), leaks in showers that are hard to get at, squishy subfloors around toilets and tubs, termites, knob-and-tube wiring, ungrounded, two-prong outlets, no central HVAC (this is all about your location, some places this is fine), and to a lesser extent water heaters.

    Heavy duty foundation or mold issues I would pass up, the rest I would consider in my offer price. 

    Nuisance things: paint, wallpaper (very annoying), holes in drywall, smells (unless it is a sign of mold), cracked windows, missing or damaged screens, no GCFI, flooring, broken handles, damaged cabinets, interior doors on exterior entrances (I see this a lot), bowls under sinks to catch leaks, general run-down-unlovedness. Windows can be pricey, as well as removing trees. All of these things add up, but they are not deal breakers for me.

    1Reply
  • Frank Wong
    Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes
    7y

    @Jim K.

    I agree with Jim there is a big difference between a newer agent and a seasoned one.  Like with many professions and life itself not everyone is great and more often than not they are average to below average.  You will know when you have a great agent.  They will know what you are thinking and answer your question before you can ask.

    I think preparation and knowing the price in the market will give you a big advantage.  That would be my advice to you.  I already know what the property is worth before even seeing it. So when I go and see the house I am checking for things that will confirm or change my mind.  You will learn this in time and in the beginning just take your time and trust your natural instincts.  Take everything an agent says with a grain of salt. 

    BTW thank you for your service.  I truly appreciate the sacrifice.

    1Reply
  • Brian Ellis
    Rental Property Investor · South shore, MA · Member since 2017 · 1k+ posts · 1k+ votes
    7y

    There is so much to look for in a house when it comes to work that needs to be done. Especially since a lot of it is sometimes hidden. Just too much to see with a couple walkthroughs. I never realized how much crap was in a house until I gutted one. Six 40 yard dumpsters it took to clean the place out, it was never ending. But I can tell you I have a pretty good eye when looking at properties now, and what needs to be done (just from one house). That house taught me a lot, since I did most of the renovation. That experience as a whole gave me good confidence in my next purchase. Without it though, I wouldn't have a clue.

    1Reply
  • Lynnette E.
    Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    7y

    I have started looking at investment properties with my two 15 year old kids the past few months.  Here is how we do it...so far.  ITs kind of a checklist.

    I start with looking at the neighborhood.  Is it deteriorating, neighbors have piles of trash or stuff outside their houses, broken collection of vehicles in the yard or kept yards, gardens, landscaping of some sort?  Kids playing or druggies selling?  Will the area go up or down in value?

    Outside the house is next, yard issues, snake holes, or gopher holes, pest issues, trip issues?  Grass, or landscaping that is renter friendly?  Are there trees over the house that could harm to house? Any hazardous trees, or too close to the house?   House entrance, walkway and driveway in good condition without trip hazards?   

    House roof  Missing shingles, age, condition, look at the flashing and chimney condition, if one.  Anything look tilted, dropped, off?

    Then house drainage, does the water run away from the house or towards it, any foundation cracks, shifts, issues?  Are the rain gutters attached ok, cleaned out, draining away from he house?  Does the driveway drain towards the house?

    IF we like it this far we make an appointment to see the inside.

    Doors and windows, square to frame, open and close, condition, broken? lead based paint?  Do all inside doors too.  What needs replacement or maybe a sign of a foundation issue?

    Electrical: enough capacity, fuses or breakers?, number and condition of outlets on walls  (eg. room addition has no outlets on walls), type of outlet by sinks in kitchen/bath by water sources? any old, special issue--knob and tube, aluminum, etc. types of lighting fixture, workable or need replacement?  and wires running under carpet?

    Plumbing-condition, check all cabinets for leaks, flooring around sinks and toilet.  Check ceilings for signs of leaks, including roofing leaks, anything need replacement for function or just nasty/old?  Check hot water heater, rusted, strapped?  functional, where is it located, CO2 issue if gas or is it vented adequately?

    Air:  Heating and cooling, what type, all rooms covered, thermostat, window units, everything working, if forced air, need servicing of ductwork, etc. age function of unit, type of fuel used.  If furnace is gas is it vented well, CO2 issue?

    kitchen:  Appliances, age, function, cabinets any sign of mold, condition, how is the ventilation?  Look at overall layout and function of Kitchen.

    Baths:  cabinets any sign of mold, general condition, everywhere, any sign of mold, function and condition of shower, tub, facet, sink, toilet, mirror condition? Is the bath vented to the outside?   Overall layout and function of bathroom

    Flooring:  Condition, function, appropriate for room (e.g. waterproof easily cleanable in kitchen/bath), level, or not, soft or 'mushy' feeling, which may indicate a mold, foundation, or underfloor failing condition.  Suitable for a rental?  Check well by water sources.

    walls: condition, holes, wavy, cracked, trimmed, paint, wallpaper, paneling, drywall, plaster and lath? Firm and solid or unsteady?  and mold? Signs of foundation issues?  Trim present or not needed?

    Bedrooms:  Size appropriate for size of house, any 'nested'-go through one to get to another- closet sizes and condition of closet

    SMELLY:  any scent of mold, pets, pet pee, smoking, smoking pot, etc.

    Fireplace, check chimney from outside for condition and inside for condition

    pool, check for condition, check deck and all attachments-heater?  filter?  pump?. etc.

    And so on for any special things the house has.

    Overall layout of house:  Is it a layout that would be functional for the type of family we hope to rent to.  If not can it be easily/cheaply changed?

    Garage:  oil spills?  Any left 'stuff'--this is where we often end up with hazmat we have to get rid of.  Mold issues, insulated, water run off inside from driveway?  overall condition, e.g. paint, roof, floor, etc.  size?  and built in storage or workbenches?  electricity?  If attached to house is it sealed to prevent fumes/CO2 from getting into the house?

    Outbuildings:  Condition, function, safety

    Any unpermitted changes you can see?  Any other condition that stands out?

    Sources--water source, well or public, if well check it, is it working, water flow adequate, water quality, when last tested and results, is the water shared, age of pump, holding tank size, etc., sewage, sewer or septic, if septic, where is the tank and where is leach field, is the leach filed area soggy?, if using services check for electrical meter, gas meter, water meter, if not present call company and ask why.  Maybe bills, maybe policy to remove, maybe issue with house.

    (We do not check insulation.  Some people do.)

    After looking at everything then we discuss what we need to fix, potential costs and if that house is worth the effort...do we like it enough to do this work, which generally goes back to overall layout and neighborhood, cost and potential rent for us.  Anything else we will work with .,, if the numbers work.

    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free