Phoenix, AZ · Member since 2020 · 42 posts · 7 votes
Hello everyone, I have a two part question.
1. If you buy a house sight unseen from a wholesaler are you then getting a full inspection or do you just go in and start fixing what you or your contractor think it needs?
2. When you’re about to start a rehab generally speaking what’s the first thing you usually do? Is it best to take care of big ticket items first for example a roof or does it even matter where you start?
I know both question depend on a lot of different factors, so thank you in advance for taking the time to help out !
Lender · Greenwood Village, CO · Member since 2016 · 40 posts · 20 votes
5y
Andres,
You nailed it. Both questions are pretty open ended. The best I can do for you is to offer up what hopefully amounts to a useful nugget or two of information to build upon in your business.
First off, (and I hope it goes without saying) purchasing a property site unseen is risky. Books could be written - probably are written about the myriad of things that could go wrong with that. We've seen it done. It can work, but I think it should be avoided if at all possible. If not possible, make sure someone you trust in the deal is giving you a reasonable idea of what the condition and scope of repairs are. I'll leave it at that.
That aside, I think the real question is "do I need an inspection"? The answer depends on a few variables. Are we talking about an experienced investor and experienced contractor that have done a decent volume of remodels in the past? If so, the real benefit of an inspection would be to document the scope of work and perhaps use it as a tool to renegotiate the price with the seller. When working with a wholesaler, a formal inspection probably won't carry much more weight than your or your contractor's own opinion on the current condition and required work.
Order of work for a rehab can vary from project to project. For items that require permitting, such as new roof, new plumbing, new electrical panel, etc., line up your trades to get you bids and start the permitting process as early on as possible to ensure you don't have any unnecessary delays. Big ticket' or small items should be prioritized in a manner that works with contractor/trade availability and the natural progression of the project. There are, of course, some sequential components to every project. For example, framing new rooms is always done before plumbing, mechanical and electrical work if and when each applies to the room(s) you are creating. Drywall work generally follows that, then texture, then paint, and so on. In general though, you do what you can as soon as you can. Time is of the essence - especially if your project is financed. The interest and carrying costs can really eat into your profits if you're not effectively planning out your project and managing the workflow efficiently.
Phoenix, AZ · Member since 2020 · 42 posts · 7 votes
5y
@Tyler Williams I agree with you brother time is really of essence in today’s market. I had a deal fall through because I couldn’t come to a price with a seller. Perhaps I was being too conservative but I’d rather have that than over pay for a property.
Buy and hold is my long term goal as well, but I want to build up capital to have a strong emergency fund before I start stacking up on rentals.
Contractor · Member since 2020 · 91 posts · 64 votes
5y
Hey @Andres Cardenas,
I’ve gone sight unseen 3 times now, twice on homes and once on land. The prices were rock bottom in a little market dip back in like 2018. Both houses turned out to be worth it, but you really gotta watch out for the time you’ll spend remodeling these things! The piece of land was better than I thought using google earth. I also dropped out of escrow on one after sending in a crappy home inspector. Lost 1/2 my earnest... but pictures from a good home inspector can do the trick and a really low price can also help you avoid losing too bad if you’re practically just buying the land. If you don’t know home construction, start looking into homesite foundation and grading standards. And yes roofs are important to fix if they are leaking!
Investor · IL · Member since 2019 · 151 posts · 135 votes
5y
I would not want to buy a property without a home inspector that I trust looking at the house. I have considerable experience in construction, electrical, and building maintenance, but it's always good to have an extra set of critical eyes on a potential project.
That being said I recently walked through a property for sale for a friend who is looking to get into rentals, and noticed some signs of a leaky boot on the roof, and asbestos insulation on some of the duct work. The bank sent an inspector I didn't know and the only thing he noted on the inspection was the water heater pop off valve drain pipe wasn't long enough, and there was an open water line with a valve shut off that wasn't capped. No mention of asbestos or a leaky roof.
In my mind these things missed were major things that needed addressed. I guess this goes back to my earlier comment that it's good to have an extra set of eyes, but also use an inspector you can trust.
Phoenix, AZ · Member since 2020 · 42 posts · 7 votes
5y
@Gail W. That’s crazy, how does that even happen? You’d think an inspector would catch these things .
I heard a guy on a podcast say that he has his inspector and his contractor walk through at the same time, I think that’s genius.
Lucky for me the inspector I used when buying my primary residence did a great job, so I have one I can trust already, same for the realtor that I used.
@Andrew Syrios yes, the inspection I’m describing would be solely to know what’s wrong with it and not as a contingency to an offer. The reason I ask is because many wholesale deals I see are snatched up very quickly and any offers with inspection contingencies are overlooked .
These days, it can sometimes make sense to get a wholesale deal under contract before seeing, but I would at least demand to do a walkthrough yourself before closing.
Contractor · Member since 2020 · 91 posts · 64 votes
5y
@Andres Cardenas I flipped a piece of land last year and that worked out ok. Gotta rent a BIG excavator and make some value. If you can figure out that, you might be able to turn some profit on land would be my guess. The one I bought sight unseen I’m still holding and probably going to sell as soon as I can do some excavation on it.
Rental Property Investor · Crystal Bay · Member since 2019 · 59 posts · 38 votes
5y
@Andres Cardenas
Dude Andres! Good questions I’d be stoked to work with someone who has the foresight to even ask these things.
1. If the sale allows for an inspection and you don’t think it would disqualify you as a buyer then it depends on if you just “want” an inspection to gather more info or if you want it as a contingency to the purchase agreement (some cash buyers just offer no contingencies).
2. What to start with first? If you can only do 1 thing at a time because??? cost?- I would address any structural issues/water issues/electrical or gas hazards first. For instance if you have a giant hole in the roof and cracked foundation that leaks... but also a gas leak- well address the most pressing danger and then most immediate cause of further problem. Think of renovation like Building the house in reverse. Start at the bottom and address every major problem up to the roof and then MEP systems.
1. If you buy a house sight unseen from a wholesaler are you then getting a full inspection or do you just go in and start fixing what you or your contractor think it needs?
2. When you’re about to start a rehab generally speaking what’s the first thing you usually do? Is it best to take care of big ticket items first for example a roof or does it even matter where you start?
I know both question depend on a lot of different factors, so thank you in advance for taking the time to help out !
Hey Andreas, I bought a house site unseen by me but my agent viewed the property. I'm not buying a house where NOBODY has seen it.
To answer your second question it really depends on what is being done but 10 times out 10 demo is first. Even if you're just changing floors you will need to rip up the old floors.
I read that you are trying to avoid analysis overload so my suggestion would AVOID site unseen and start with something small simple. Maybe start with a condo. To keep it 100 with you, the questions you're asking as the least of your concerns. Managing contractors, pulling permits, etc are the real issues when getting into a rehab.
Investor · Los Angeles, CA · Member since 2016 · 256 posts · 111 votes
5y
@Andres Cardenas when it come to permits its getting your plans approved, getting the city out to view it, and getting the work signed off. It can be a drag if not done correctly.