Newbie out of state investor - inspection & due diligence tips?

14 Replies

I am curious if anyone has experience with the inspection process for out of state investors (newbies) that cannot be on site during the inspection. Any general tips for the due diligence process for a first-time OOS rental property buyer? 

Thanks, everyone :)

@Tyler Silverman Is this a turnkey or flip investment?  If turnkey, why not hire two different home inspectors?  Sure it costs you extra, but home inspections are reasonably priced and will help you confirm any doubts.  

If this is a flipping investment with a turnkey provider, always get a third party home inspector!  Especially during billing periods, you should provide your home inspectors the general schedule of value line items but have them write down their estimates for percentage complete.    Again, this will cost you extra but it is a quality assurance strategy to make sure you don't pay ahead of schedule and be left in the dark.

Best of luck and keep us updated with whatever you do.

@Kenny Dahill and @Ali Boone - It's a triplex that is already rented out...more of a turnkey, simple transfer of ownership, and not a fixer-upper (that's the intent, anyway). It's an older building (from the late 19th century), and I thought about getting the sewer main video scoped in addition to the standard inspection. From my visit, we did notice some attention to the roof (small patches in place) and a slight water intrusion in the basement. 

Originally posted by @Tyler Silverman :

@Kenny Dahill and @Ali Boone - It's a triplex that is already rented out...more of a turnkey, simple transfer of ownership, and not a fixer-upper (that's the intent, anyway). It's an older building (from the late 19th century), and I thought about getting the sewer main video scoped in addition to the standard inspection. From my visit, we did notice some attention to the roof (small patches in place) and a slight water intrusion in the basement. 

 I would definitely encourage you to do the video scope.  As to the inspector, use a third party, but someone who has an excellent reputation and reviews.  If you have a buyer's agent, they can be there with the inspector, but make sure the inspector understands they are working for you.

Have your real estate agent or property management company attend the onsite inspection. Then, read through the inspection report throughly with your real estate agent/property management company. Since you are a newbie, they are going to know more about the inspection/due diligence process anways.

Originally posted by @Tyler Silverman :

I am curious if anyone has experience with the inspection process for out of state investors (newbies) that cannot be on site during the inspection. Any general tips for the due diligence process for a first-time OOS rental property buyer? 

Thanks, everyone :)

 You don't need to be onsite for the inspection. When an inspector completes an inspection they draft a rather robust report complete with photos and descriptions. Many of them are 50+ pages. Most inspectors will also do a phone consult with you to talk about their findings.

Originally posted by @James Wise :
Originally posted by @Tyler Silverman:

I am curious if anyone has experience with the inspection process for out of state investors (newbies) that cannot be on site during the inspection. Any general tips for the due diligence process for a first-time OOS rental property buyer? 

Thanks, everyone :)

 You don't need to be onsite for the inspection. When an inspector completes an inspection they draft a rather robust report complete with photos and descriptions. Many of them are 50+ pages. Most inspectors will also do a phone consult with you to talk about their findings.

 Hello Mr. James, what types of inspections do you recommend if its an old house?

@Tyler Silverman where is this? Don’t buy it. Long distance property that’s super old. Generally speaking it’ll be a money pit. Has the electrical and plumbing been updated ?

Originally posted by @Tyler Silverman :

I am curious if anyone has experience with the inspection process for out of state investors (newbies) that cannot be on site during the inspection. Any general tips for the due diligence process for a first-time OOS rental property buyer? 

Thanks, everyone :)

You don't need to be onsite. As far as due diligence? In my opinion the most important thing you can do is get a d*** good real estate agent. One that invests in that market themselves, and works with out of state buyers as their niche. They can help with estimating rehab costs, ARV, and rents. Also, they will have connections with contractors and PM's.


 

@Tyler Silverman Is this the first property you have ever purchased or just the first one you have purchased at a distance? 

If the previous, I would highly recommend doing what you can to be as a part of the home buying process as possible and I would certainly be at the inspection. Once you have a few under your belt and an inspector you know you can trust then maybe not being there will make sense, but until then you want to learn the business and in my experience there is no shortcuts for that. 

Originally posted by @Miguel Teran :
Originally posted by @James Wise:
Originally posted by @Tyler Silverman:

I am curious if anyone has experience with the inspection process for out of state investors (newbies) that cannot be on site during the inspection. Any general tips for the due diligence process for a first-time OOS rental property buyer? 

Thanks, everyone :)

 You don't need to be onsite for the inspection. When an inspector completes an inspection they draft a rather robust report complete with photos and descriptions. Many of them are 50+ pages. Most inspectors will also do a phone consult with you to talk about their findings.

 Hello Mr. James, what types of inspections do you recommend if its an old house?

A General Home Inspection should be all you really need. If there is some other issue the General Home Inspector will make recommendations as to which specialized professionals you'll need to follow up with.

 

Thanks, everyone for chiming in, even on my post from over a year ago! I had to review this post to remember what I was saying. Long and short: I ended up getting a general inspection and not purchasing the property. There were too many things in the inspection report, and the property was already a stretch price for me. Before investing in other areas, I had bought two properties in my local area. It was/is a lot of ground-up and up-front work, but I have learned a lot (both successes and mini-failures) and am currently happy with my out-of-state properties. Again, thanks all :)