Hiring a Home Inspector for Investment Properties

13 Replies

Hey Guys and Gals,

I just wanted to start a poll of sorts. I am interested in how many of you hire an inspector to check out investment properties before you buy? For fix-and-flip, do most folks just ask their general contractor to come to the property to asses the cost to rehab? Would you pay for them to do this?

For buy-and-hold I would assume you hire an inspector unless you have been in the industry long enough. I think it's always nice to have  another set of eyes look over the property before you buy. 

I am really interested to hear what the seasoned veterans are doing, I have a feeling something like a home inspection doesn't make the pre-purchase check list, but I may be wrong...

This is investor-GC approach to control the cost as any overruns will eat up the profit:

If you use a hands on type realtor they know what is wrong and what needs to be validated, what is fashionable and approx. low cost. You need to identify what is required to a contractor focus on projects to work on. Experienced investors order and pay for materials themselves cut the check for labor to get started. If you rely on contractors for materials, ideas there is a good likelihood he will mix your project with others make you pay expensive items that should belong to another customer.  

If you can rely on contractors to make all the decisions initially any cost overruns will be justified still. 

@Christopher Lessing I have several LTR properties - all single-family homes. I used an inspector for my first property or two, but for most of the rest, I walked through with my realtor, who has a building background and is also an investor.  I did get one of my latest properties inspected - mainly because it was a big property with a pool and I was concerned about the pool. I agree with @Jason D. , it can be a good negotiating tool. Most of my properties have been foreclosures, and I've always assumed that inspection-report based negotiations would not work with most of the asset managers in charge of foreclosures. I may be wrong, however.  Hopefully, someone will chime in with their experience.  As for big surprises on my non-inspected purchases, things have gone well. Nothing huge.(Though I have had some surprises) After you have walked and purchased several properties, you get a sense for what will require your attention and money for the rehab. That said, an inspection report opens your eyes to most every weakness of the property!

Originally posted by @Sam Shueh :

This is investor-GC approach to control the cost as any overruns will eat up the profit:

If you use a hands on type realtor they know what is wrong and what needs to be validated, what is fashionable and approx. low cost. You need to identify what is required to a contractor focus on projects to work on. Experienced investors order and pay for materials themselves cut the check for labor to get started. If you rely on contractors for materials, ideas there is a good likelihood he will mix your project with others make you pay expensive items that should belong to another customer.  

If you can rely on contractors to make all the decisions initially any cost overruns will be justified still. 

 For you guys that get most of the materials your self, are you going to big-box Home Improvement stores or are you able to find it wholesale elsewhere? I have yet to come across and building material wholesalers here in San Antonio, TX. I like the Investor- GC approach, but I can't help but wonder if I'm leaving money on the table by paying retail at Lowes / Home Depot. 

I was able to get ~$25K worth of concessions on a $250K property for an investor client using the inspection report. The $300 it cost to get the Inspection more than paid for it self :)



I shop where contractors shop. 
Most builders, contractors go to same stores as others major stores. Bidding, prefer customer discounts, coupons.  The surplus stores have inconsistent quality. I pass.

Cabinets, stones, bath, flooring materials there are many specialty stores that sell high quality materials often discounted. Same with windows. We also have import companies next to the harbors.They have their own factories overseas. 

I'm an agent, investor, and have been working on my home inspection license for awhile now. It's probably overkill to learn home inspection, but I've found it useful. Paying for an inspection will only cost maybe $300, well worth it. But after awhile you'll find the same problems repeating over and over at each new property, so you'll eventually not need the inspection. You'll see the fire-risk electrical panels, slab foundations issues, ungrounded electrical, aluminum wires, exhaust venting into attic, badly graded lots,   etc. and it will eventually not scare you as much.  And you'll work out standard solutions that you do on every property. Also, as an anti-tactic, when representing a seller I refuse to look at inspection reports, and only negotiate using the standard contract forms haha.

@Christopher Lessing I have a lot of clients that are investors and every single one of them will get an  inspection done. As a realtor, we can only point out so many things to bring to your attention. With that not being our actual profession certain liabilities could arise. Overall, inspections are not that much money and could potentially be saving you thousands of dollars in the future. You can also use the report for negotiating purposes so I would recommend getting an inspection done on any property. 

My first few purchases (BRRRR) were in inspected by a home inspector. Peace of mind, negotiation, etc.

after a few, I feel pretty confident about everything I can see during the walkthrough. BUT, if I have concerns about the roof, foundation, etc, I’ll still have an inspector come through and do a limited inspection - and make it clear in my offer to the seller that the inspection will be focused only on potentially significant issues. Note that I don’t change the standard inspection clause wording, so I can still escape if needed... but I try to make it clear to the seller that I’m not going to start asking for $200 to repair the kitchen sink. I’m looking at the unexpected $5K roof issue, since I can’t get up on the roof to see it during a standard walkthrough.

@Gene Livingston it sounds like you are covering all your bases with becoming a licensed inspector also, it will definitely change the way you walk through homes. 

@Mike McCarthy that is a good idea to have an inspector come on site if anything major sticks out to you. Some times just having another set of eyes can bring things up that we would otherwise miss, even as experienced home buyers. 

We've done both in the past.  When I need to make a fast offer, I will skip the inspection.  I am usually offering low enough to cover any unforeseen issues.  We like to use a laser level to get an idea of foundation settling etc. and we are pretty thorough but by no means to the level of detail of a licensed inspector.  If the foundation is off much, I may get a foundation bid before making an offer.  These can be costly repairs.  If we plan on foundation, we offer assuming broken plumbing.  

Best of luck.