What You Need to Know About Home Inspections for Real Estate Investing
Investing in Real Estate? Don't Skip the Home Inspection
Doing a house inspection is pertinent when investing in real estate. A home inspection is a thorough assessment of the state of the property and can provide you with a multitude of useful information regarding the investment you're making. What you should know about home inspections for investment homes is outlined here.
Not All Home Inspectors Are the Same
Some inspectors have more knowledge and experience than others, and some are more thorough. This is why it's so important to work with a trustworthy home inspector who has a reputation for being thorough and who has a history of delivering detailed findings. By seeking referrals from other investors, real estate professionals, or property managers, you can locate a reliable home inspector. Online reviews and ratings of house inspectors in Connecticut can also be found.
Include an Inspection in Your Contract
When it's a seller's market or in some circumstances to expedite the process, buyers may attempt to forego the house inspection. Even if it's merely for informational purposes, it's always a good idea to include an inspection in your contract. Any hidden issues with the property that might not be noticeable during a walkthrough may be found with the aid of an inspection. If there are significant problems that need to be resolved, it might also provide you leverage to bargain with the seller for credits or repairs.
Tip: If you’re not comfortable completely waiving a home inspection in a competitive market try using “Home inspection for informational purposes only” in your offer package. The expectation here is that you will not be coming back to the seller to renegotiate but giving you the confidence you’re not getting in over your head with potential hidden issues or expenses you may not be aware of. And remember – don’t stray from your plan, if you aren’t comfortable waiving an inspection, then do not waive an inspection!
Use the Inspection Report to Learn More About the Property
During the home inspection you will have the opportunity to learn about the items that help the house function. These items may or may not always be needed and you can discuss them with your home inspector. An example may be a garbage disposal, this is something that is nice to have but not required. Once an item is in the house to be used the expectation from your tenant will be that it will be repaired or replaced when it breaks. You can discuss items like this with your home inspector to see if you should eliminate them and/or have them repaired or replaced before a tenant moves in. Learning about both preventative maintenance and annual maintenance can help limit or even eliminate some future phone calls from tenants.
Additional Inspections to Consider
In addition to the typical "house" inspection, there are other inspections you might wish to take into account, depending on the location and state of the property. These are a few instances:
Radon Inspection: A radon inspection will measure the radon levels in the building and inform you of any mitigation requirements.
Septic Inspection: You should have the septic system on the property inspected to make sure it is operating correctly and to find any potential problems.
Well Inspection: You should have the well on the property inspected to make sure it is supplying clean and safe water. You may also want to test the pressure of the water at this time.
Additional Pest Inspection: If termites, rodents, or other pests are prevalent in your neighborhood, you might want to have further pest inspections.
Assessing Capital Improvement Projects
You can evaluate potential capital improvement projects for the property with the aid of the inspection report. This covers things like the asphalt driveway, roof, siding, windows, and HVAC equipment. You can get a sense of these objects' condition and how much "useful life" they still have by reading the report. Planning for upcoming repairs and replacements can be made easier if you are aware of the state of these objects. Based on the present state of these objects, it can also provide you with an indication of the expenses involved and if the property is a wise investment.
Health and Safety Concerns
Any health and safety issues with the property will likely be highlighted in the inspection report. These are the sections of the report that will catch the seller's eye and might present an opportunity for you to talk about credits or repairs. Mold, asbestos, and plumbing or electrical problems are a few examples of items that can be a health and safety hazard. To protect the safety of everyone who will be living or working on the property, these problems should be fixed as quickly as feasible.
Share the Inspection Report with Your Property Manager
Once you've received the inspection report, it's a good idea to share it with your property manager. Your property manager can use the report to plan for future repairs and maintenance and to ensure the property is safe and habitable for tenants. Investing in real estate can be a lucrative venture, but it's not without its risks. That's why a home inspection is a critical step in the process. It's like giving your potential property a full-body checkup to make sure it's healthy and ready for the long haul.
Think of it this way - you wouldn't buy a used car without taking it for a test drive and having a mechanic give it a thorough inspection, right? The same goes for real estate. Don't skip the home inspection to save a few bucks. It could end up costing you big time in the long run.
The home inspection is a small cost in comparison to the purchase price so don’t pass on the home inspection unless you have the experience, confidence, and risk tolerance to deal with the potential surprises. Peace of mind goes a long way! Happy Investing!
