Hello everyone, I am brand new to real estate investing and bigger pockets. I need to inspect a house for the first time to estimate repair costs. I am far from a handy man so I could use any help regarding what I should be looking for. Any info would be greatly appreciated. Thank you.
This question comes up all the time on this site and there is no easy answer. I wish I could provide you with a sheet that has costs associated with the fix but it can vary greatly from one market to another, less materials costs but more-so labor costs.
Here is a great link to a blog post from a couple years ago but obviously this sort of stuff still hold true. http://www.biggerpockets.com/renewsblog/2013/03/20...
If you are willing to spend some money I know there are apps out now that help estimate construction costs, I just have never used them nor know anyone who has so I am hesitant to mention them and definitely not endorsing them until I find out more about them.
There is no cheat sheet for inspecting a home for repairs. It is really best if you have someone with you who understands construction.
A few pointers:
look for cracks in the walls and floors.
Look for water damaged drywall.
Do the doors close and seal properly?
Is the bottom of any wood on the outside of the house showing signs of decay?
Would you want to live on the flooring or use the cabinets that are already there? Don't try looking at this from a high end perspective, you need to try and look at it from the potential buyer's perspective.
Anywhere there is a plumbing fixture, look for signs of leaks.
Do the interior doors close properly or show signs of wear?
Are there signs of pests such as numerous dead bugs or rat droppings?
Does the roof show signs of wear?
Is the electric on? If so, make sure to run the AC while you are there to make sure it works.
These are just a few things to look for and hardly an all inclusive list.
As for cost, I use my experience in construction and would not feel remotely comfortable offering unit prices because prices depend on quantity and severity of the work that needs to be completed as well as geographic location.
An example of price guides: In my former life I have had professional estimating services call me for regional unit pricing. I do not know how reliable the other estimators were that they contacted. I would not want to gamble my personal money on pricing services that have just called around to formulate unit prices.
Lastly, I know everyone want to be on a budget and save money where possible. I might suggest it is worth the cost of paying a home inspector for a report. That report just became your price list for repairs. It most likely will not have cosmetic issues, but you can decide if the space needs new paint or flooring.
thank you so much Sean and Hugh. That was very helpful, especially the pointers of what to look for. The home inspector idea sounds great too.
I agree with @Hugh Ayles in that you should take someone (or multiple people) with you during your walk through. These guys can be inspectors, contractors, etc.
I also have very little clue on how to walk through a property and understand what needs to be repaired and the associated costs with those repairs. I can run circles around the financial analysis/models, but throw me in a home and ask me to provide you with a ballpark estimate and we'd all lose a lot of money.
To mitigate this weakness, during the due diligence phase of my recent 3-unit purchase, I walked through with several contractors and listened to what they pointed out. I then included their repair estimates in my models. I didn't walk through with the inspector, but I did read his report and then contacted contractor to understand the repair costs of his suggested repairs.
The key is to know what you're good at and what you're not. Being able to identify your weaknesses and then mitigate them will lead you to success.
The 6 most important things you need to check for when buying real estat are:
1. Foundation (water leaks, cracks, tilting, exposed areas etc.)
2. Structure (settling, pest/termite, humidity/water etc.)
3. Roof (when was it last replaced?)
4. Plumbing (Cast iron, galvanized steel, polybuthelene, copper, pex)
5. Electrical (Copper, Aluminum, breaker boxes, GFCI)
6. Heating and Air (Maintenance, cooling aide, rodents etc.)
As a Rule of thumb, if the building was built after 1965 and before 1985 chances are that the builder used some kind of “innovative” (read cheap) solution trying to save money.
This includes aluminum wiring, vinyl or T-11 siding, galvanized steel piping, Polybuthylene piping, double paned windows of dubious quality etc.
Avoid these products if you can. If you cannot avoid it, make sure this is in good shape when you buy the property. It can save you TONS of headaches down the road. Also confirm with your insurance company that they cover these issues (especially electrical aluminum wiring).
PS if you live in an area with air conditioning, be careful about the rules concerning Freon.
PS if you live in an area with pests, bugs, etc. you have to take extra care that you aren’t buying an infested property.
Hope this helps.
And, yes the cost of a home inspector is totally worth it! can you find a good one using yelp or angie's list?
Wow! This is my first post and everyone is so helpful! I really appreciate it. Thank you so much everyone.
PLEASE find a good contractor or a construction company that does it "all". When purchasing my first home, my "home inspector" couldn't tell a door knob from a light switch. I'm obviously exaggerating a bit but he was not knowledgeable at all. Do your research and make sure the person has experience and not just a qualification.
My point about the home inspector was having someone with at least some knowledge to provide a checklist of repairs. Then that list can be the starting point for a scope of work.
You definitely want to pre-qualify your contractor before letting them work for you.
@Ernie Thivierge , I am participating in a local real estate peer group. I know construction but I may have questions about real estate investing. Within my group I am happy to share knowledge about construction while others can share knowledge they have.
So I'm just a new wholesaler. I don't have contractors who work for me since I do play a part in repairing the house. With the advice I e gotten I was going to see and take notes on what I can then I'm assuming the buyer would want to see it before the deal. Is that the wrong assumption?
I agree whole-heartedly. Just sharing my experience with my "home inspector that has 20yrs experience".
And a "new wholesaler"? From what I have read, you have to have pretty good connections to start as a wholesaler? Take notes?