The roof and exterior (sides and windows) is #1 as you pull up. Issues there and you start to get your radar up. When we do walkdowns, we always bring a circuit tester to get a feel for the electric (area dependent but with many of the homes in our areas being likely to have knob-&-tube, we need to get a feeling for as total rewire or not). You have to consider the layout even on a rental property as it needs to make sense to today's renter or buyer. Is it a refresh or a remodel? If there is a basement, it makes moving plumbing easier than a slab which can dramatically increase the reno cost. We have seen slab homes that would really be great with plumbing moved but adding that cost, the numbers did not work and we passed. We look past flooring, wall colors, light fixtures and the like which we have seen other buyers including investors walk away from a great deal due to bright purple walls or orange carpet. Know what can be reused and what needs to be replaced and the cost for each. We try to refinish tubs and sinks and bathroom counters rather than tearing them out - it saves a TON of time. Kitchens . . . . can the cabinets be refinished or refaced - again, more savings but you need to look and be able to assess quickly. Look at HVAC equipment - learn how to read dates and see how much life is left (look at the filers to see if they have been maintained). If you can get or at least look in the attic, do you see water stains - if so, a roof may be an expense. Look at plumbing where you can from where it comes into the house to the end appliances . . . PEX, PVC, cast iron, galvanized . . . again, a quick way to gauge what you might be looking at. Always estimate high as being under is a plus, over will sink you. We do our walkdown to serve as input into an offer in under 20 minutes. You have to learn how to gauge good or bad on the big ticket areas. You can always write the offer contingent on an HVAC or roof inspection. We have found that bounding the offer with a specific inspection is usually not an issue but a whole house inspection is a hurdle that will ensure you lose the deal if another investor submits an offer without that contingency.
We have a tablet we use to capture info on the walkdown and then use a detailed spreadsheet that looks at each room and activity with a number which we use to make the YES / NO decision as to buy or not.
Water and structure, before anything cosmetic. The experienced flippers I talk to head for the basement or crawlspace first, check ceilings for stains, and notice doors that stick, floors that slope or a musty smell. A dated kitchen is easy to price from the doorway. A cracked foundation, a bad sewer line or old wiring is what turns a decent spread into a loss.
You're right that the early questions shape the rest, and knowing which surprises are expensive is most of what experience buys. It matters for financing too, since most rehab lenders release draws against the budget you submitted, so anything missed usually comes out of your own cash.
The kitchen tells you the resale, the basement tells you the profit.
My first question is about the layout, not the finishes. I buy single-family BRRRR houses in Memphis under $100K, and I am looking for a 2/1 I can turn into a 3/1, or a 3/1 into a 4/2. A carport conversion can do that when the footprint and roofline work. I walk the house and ask where the extra bedroom goes, and whether it flows like a real bedroom. If it does not, I pass, no matter how clean the kitchen looks. I underwrite to the 1% rule, target an ARV of $180K-$265K, and for Section 8 I look at $1,395-$1,950 for 3-bed-plus houses. My in-house property management team has to rent it after closing, so the layout has to work for a tenant, not just for a photo.
Hi Siahna, great question, and I agree with the water-and-structure answers here. As an agent, the first thing I look at is the layout, because everything else flows from it. If the floor plan works for today's buyer or renter without moving plumbing or load-bearing walls, the rest is math. If the layout is awkward, no amount of new finishes fixes it.
After that I look for water and structure: stains on ceilings, soft floors, foundation cracks, and the age and condition of the roof, because those are the surprises that blow up a budget. Cosmetics come last for me, since paint and fixtures are the cheapest part of a flip. What does the layout tell you before you even start pricing the work?
