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Should a Real Estate Investor use an Inspection Company?

By Ed Reeve

Home Inspector with Inspect-It 1st Home Inspection NE Ga

February 23, 2008 05:54 AM

With a huge inventory of available properties for sale, right now seems to be a perfect time for a real estate investor to find the right type of home, building and or commercial properties that fit their investment capital.

After finding the right investment opportunity, the first consideration you should have is having the property inspected by a professional inspection company. Even though a lot of investors do their own repairs, remodels and conversions, it would be very wise to know what you are about to undertake. Are you prepared financially to replace a roof? Does the building have outdated galvanized plumbing or knob and tube wiring?

When you are looking at the properties it is very easy to overlook or miss a potential problem or major defect. For example, on a multi-unit building with 6-12 water heaters, knowing the manufacture date, installation date and fuel source for each unit is important. As with all components of the building each separate water heater has an average life expectancy. If the existing water heaters are all form the 1980’s you should expect to replace these very soon, with an average cost of approximately $400-450 each. That’s a whopping $4800-54000 to replace these units.

When you have the building inspected professionally you should expect to know the condition of the following after the inspection: Plumbing, Heating, Air conditioning, Electrical & Wiring, Roofing system, Foundation, Windows & Doors, Interior & Exterior components, and etc. The one thing that typically isn’t as important to many investors are cosmetic issues. I have found that cosmetic issues such as faded paint, scuff marks, stains, nicks and etc. are outside the scope of most inspection reports.

As a real estate investor you no doubt have a group of professionals helping you grow your investments such as Realtors, Title insurance company, Pest control applicator, Appraiser, Mortgage or lending company and etc. Having a qualified residential / commercial inspector is equally as important. After having the building inspected you should have enough information to know whether you really want to continue with the purchase and investment.

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David Soto - Illinois Home Loans & Mortgages

Illinois Home Loans & Mortgage Refinance - Chicago, IL

i say its always better to be safe than sorry, unless he is an expert on inspecting homes i would highly recommend getting someone who knows what to look for, you can either gain by your experience, trial and error, or from someone elses experience(which is faster and less costly).

Feb 23, 2008 06:00 AM

Caryn Schniederjan

RE/MAX Dallas Suburbs - Plano, TX

Owner-occupied or investor purchase, I believe a home inspection is a very worthwhile expense. When talking with clients about home inspections, I tell them that some of the issues that come up as "in need of repair" might be your honey-do list for the first few months after purchasing the property. Some of the things that we are really looking for is the condition of the major infrastructure of the house - HVAC system, roof, plumbing, foundation, etc. We also call in experts on some of these systems if the inspector deem it necessary.

Feb 23, 2008 06:36 AM

Ethan Dozeman

Realty Executives Platinum Group - Grand Rapids, MI

Real Estate in Grand Rapids

An opion is that if the inspector was liable if they didn't find an issue, it might be worth it. from an experience the inspector is only liable up to the amount of the inspection. For most home buyers I think an inspection is important. Some investors it might be a good step, but is it neccessary for the seasoned investor who is willing to accept the risks anyways?

Feb 23, 2008 02:57 PM

Clark Garrison

Taylor 1 INC - Atlanta, GA

"Loan Modifications"

Hi Ed, i'm a investor and Home inspector by trade and i've always wondered why more investors won't spend the money to get the whole story about a property they are going to purchase. it's the reason i went to school for H.I. in the first place. Most Contractors only tell you part of the story. Many of them miss vital points that could later cost thousands to repair. I believe if you can build your clientèle and show investors how it's worth every penny they would be inclined to invest in an H.I.

Mar 17, 2008 03:00 PM

Bob Elliott

Elliott Home Inspection - Chicago, IL

Chicago Property Inspection

Good post as I always hear how investors feel no need ,as they are looking for bargins to rehab and figure why inspect a place they are going to tear up.

Mar 17, 2008 03:40 PM

Mitchell Captain

AllSpec Professional Property Inspections Inc - Fort Lauderdale, FL

Home inspections in Broward, Dade, and Palm Beach

I have done a lot if inspections for investors. Some of them want to know what is wrong. And some want to use it as a negotiation tool.

Some investor don't care because they gut the property and others just use a lot of duck tape.

Mar 18, 2008 12:48 AM

Andrew Cox

Cox Property Services - Kissimmee, FL

I think this touches on the question about other people using inspectors... Should a general contractor get an inspection when he's buying a home? What about the Realtor that "knows quite a bit" about construction?

I maintain that any home buyer should have an independent third party inspect the home, whether to occupy, or to buy as an investment. It's too easy to overlook something if you are a party to the transaction.

Mar 18, 2008 09:16 AM

Mark Reusch

A Major Inspection Service & Consulting - Simpsonville, SC

I work with or have worked for 3 investors. I met one by chance at a dinner with friends and we had a conversation about whether he needed and inspector or not. We talked for a couple hours about what his needs were and were not. He does not flip every house some he uses for income properties. We kept in touch and continued or conversations about this issue. One day I had lunch with him and he said he was about to purchase and close on an income property. Well I just had to do it. So I said OK well have you inspected the house and he told me yes. I told him OK well I want to inspect it and will do it for free, however I will keep the report private and we can monitor how ell you did. He agreed so a few days later I inspected the house. I did my report and uploaded it on my computer. We had lunch a few more times and I never brought up the issue again. Well several months later we had a nice wind and rain storm. His tenants called and wanted to know who was going to fix the leak in the roof and when as it had been leaking for several hours. Then a couple weeks later he replaced the hot water tank that the bottom fell out of. Well we had lunch again and he asked if I still had the report. I told him yes and I printed it out for him. The hot water tank was mentioned along with the valleys in the roof being substandard and potential sources of moisture intrusion. Oh and he was amazed at the other issues such as the Federal pacific breaker box and the furnace that was in the crawl space on the ground and not elevated. Just you normal run of the mill things. Well I inspect every building he buys now and also the 2 friends he invests with. I am going to get me commercial license as well because now they are looking at commercial investments

Mar 29, 2008 03:35 PM

MC2 Home Inspections

MC2 Home Inspections LLC - Indianapolis, IN

Indianapolis home inspection service 317-605-3432

I would have to echo Andrews comment above. An independent third party to inspect a home is the smartest thing any home-buyer can do. I inspect for quite a few investors as well and they all seem to really value my reports. Most of them are out of state investors who have never even physically seen the property, so to have a third party inspect the homes for them and act as their eyes and ears just makes sense.

Mar 31, 2008 12:05 AM

Greg Lightfoot

Solid Source Realty - Riverdale, GA

Every time anyone purchases a home an inspection is needed no matter if it is a investor or owner-occ.

Apr 20, 2008 09:54 PM

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