The Outer Limits: How to Speed Up the Property Inspection Process on New Deals

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Is your passion hang gliding? Bull riding? Planking? No matter what your hobby is; forget it. If you are an investor looking for the perfect 10 rental, you won’t have time to do any hobbies if you aren’t efficient. Investors may need to look at tons of properties to find one keeper. To rule out properties quickly, speed up the process by starting your inspections on the outside. Many of your big ticket items are found outside, not inside a house. Personally, I’d rather pay for paint over fixing foundations and roofs.

Below are a few hints for weeding out properties without ever going inside.

Take Some Speed

When inspecting properties, your main focus is to cull out the duds ASAP. It’s all about speed. How fast can you make a decision to say “no” to a property? The more “no’s” you go through, the sooner you will find a “yes.” If you drive into a neighborhood and don’t like the mobile home park in the vicinity, keep driving. Don’t feel compelled to think: “I might as well look inside now that I’m here. “Feel uncomfortable with the water tower abutting the property? Abhor properties with steep driveways? Shun rentals at the bottom of a hill because of drainage issues? No biggie. Don’t get out of your car. You have inspected and rejected the investment just by driving up to the property.

Go with Gaga: Start on the Edge

If the property passes your “drive up, look around the neighborhood” test, it’s time to get out of the car. Bring your notes or iPad to write up a preliminary punch list.

The very first time I went to look at potential rentals, I had no clue what I was doing. I planned to go straight to the kitchen to see how cute the layout was. I figured tenants would like a spacious kitchen. Luckily, my mentor, Brian Porter, wouldn’t let me go in the house until I had walked the perimeter.

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So What do you do? How Do You Start your Property Inspections?

Start out by circling the property. Go clockwise if the fences allow. Check out the foundation with an eye for cracks, holes and slumping walls. Hope to see an intact HVAC unit that doesn’t date back to the Eisenhower era. Be prepared to go in accessible crawl spaces so skip the high heels and suits. As you continue your tour, note the condition of the roof, gutters, the siding, and the decks. If you don’t like what you see, time to leave for the next property.

Junk Yards?

While walking the perimeter of the property, check out the yard as well. Do you see any money drainers such as a swimming pool or dilapidated outbuildings? What are the retaining walls trying to tell you? Trees are nice for shade and appearance, but are any huge limbs waiting to fall on the roof? Do the neighbors horde tires and rusted cars in their yards? If you feel uncomfortable with the creek behind the house, skip going inside and focus on the next property.

Once you have completed your outside tour of a property, you can decide whether it’s worth your time to go inside. If the property is a definite “no,” feel no regret in driving away before entering. Congratulations! You just gave yourself more time to find a keeper.

Question for Readers:

What hints do you have for physically inspecting the outside of a property?

Photo: Sean Ellis

About Author

McKellar Newsom invests in single family properties in seven different markets. McKellar partners with investors who don't have time to devote to real estate investing.

23 Comments

  1. Brandon Turner

    Good info McKellar! It’s true, usually you can spot the big problems quickly from the outside. There is no point wasting time if we know it isn’t going to work out.

    The only thing I’d add to this is to gain a good understanding of what the cost is for some of those “big ticket” outside expenses are – because if they scare us they will definitely scare other people and we might be able to snag an even better deal simply by lack of competition. For example, if there is a nasty pool – know how much it costs to fix, replace, or demo it and factor that in. Or if the roof is bad, know the cost of a new roof and factor that into your offer. Often times, the best deals are ones that most people think are “way too expensive” to fix.

    Thanks!

    • McKellar Newsom on

      Hi Brandon,

      I agree. If the numbers work, it’s worth looking harder at a deal, no matter what the repairs might be. Roofs and HVACs are actually easy to contract out and fairly easy to estimate.

      I like repairs that seem scary to others but are actually cheap to fix. For example, I like to see a house with ugly graffiti. Thanks Brandon! mck

  2. McKellar – Scanning the outside of properties to determine whether they are going to work for you as a deal is a great way to save yourself considerable time and energy when scouting numerous properties.

    This is a great first contribution to the BiggerPockets Blog! I’m very excited to have you on board.

  3. Great topic mck. I totally agree about the first inspection.

    I also carry a small gym bag in my car for this kind of stuff. In it I have light weight coveralls, gloves, tape measure, and a flashlight. This little kit has helped me when the call is close to buy or not.

    I look forward to reading more about your strategies.

  4. McKellar- Great post. My New Year’s Resolution was to stop talking myself into things and move on to the next one as soon as the first red flag is raised. I’ve never been scared of pools, roofs or even foundation problems. But with the huge number of deals out there, you have to budget the time value of money and opportunity costs just as precisely as the rehab expenses.

    • McKellar Newsom on

      Thanks for your comments, David. Great resolution!

      I’ve filled in pools, redone roofs but have for the most part stayed away from foundation issues. When I go look at a property at a specific price, I like to have a maximum amount for rehab in my head. If it initially looks like I’ll be going over the maximum, I move to the next property.

      I have a found that moving on quickly is especially difficult for clients new to investing. It’s the “well, we are here…” that can waste a lot of time. Thanks again. mck

  5. McKellar – great fast and easy way to assess properties!

    We promote this, especially to new investors. “You don’t know what you’re getting into or how to handle it so, if it doesn’t look good going in, don’t go in!”

    Thanks for the quick tip: “give yourself more time to find a keeper.”

  6. Halina Lawson on

    Great advice McKellar! I’m new to real estate investing. How easy it is to forget that I’m not looking for my dream home…I’m looking to make money to then be able to buy my dream home! The focus needs to be “in and out” and not waste time inspecting something that isn’t going to work for me.

  7. McKellar Newsom on

    Halina, I think one of the biggest mental challenges for new investors is to get to the “I’m not going to be living there” state of mind. Thanks. mck

  8. Great article. Has a newbie in the game, this information helps to create a solid foundation to build from . I look forward to more advise and strategies. You can never be over-educated in RE. Thanks

  9. Dany Tremblay on

    Great article McKellar, this will help me in my futur investment prospects. It makes a lot of sense and I will use it for sure, after all time is money!

    ps: I like the picture in the begining of the article, is it one of your property?

  10. Brian Levredge on

    Good article, Mck! The outside-in approach is very important and one that many people overlook because they tend to get emotionally involved with other aspects of the property (such as the kitchen). Keep em coming.

  11. Eddie Bodkin on

    Very good! Time equals money and any info about increasing efficiency is much appreciated. Saving a few minutes of your time on one property may not seem like a big deal but when you are looking at multiple properties per day or week, it really ads up. Thanks for your contribution!

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