The ideal investment property is not solely dependent on a profit-bearing market with a potential for above market returns; the property’s overall condition is a significant factor that real estate investors need to consider before buying. To assist you in this endeavor, the team at Express Capital Financing has built a convenient checklist to reference when conducting a property walk through.
Why the Walk Through is Essential
The primary thing to keep in mind during the walk through is to take your time and focus your attention on the important property details that could make or break a transaction. Adhering to a property inspection checklist can help you narrow down potential options and lead to profitable investment assets. By pinpointing both significant and relatively minor issues of a given property, the easier it will be to compart it to other investments and eventually settle on the one that is best aligned with your short- and long-term investment goals.
For fix-and-flip investors in particular, a thorough property inspection will enable you to accurately forecast a rehab budget to cover all needed home upgrades uncovered during the walk through. If the initial walk through of a potential fixer upper uncovers excessive costly repairs, the investor can simply back out of the investment and move on to the next property without having to waste the time and energy of addressing these issues when it is too late post-purchase.
Note that the selling party will not always disclose all pertinent information regarding needed home improvements. Accordingly, successful real estate investors need to be diligent when analyzing projects. Although it is an additional expense, investors should always have a professional home inspection done on every property they are seriously considering to augment their own personal walk through. This additional layer of the due diligence process will give you peace of mind during the closing process and allow you to efficiently plan the next stages of the investment project.
Know What to Look For
Let’s start with the foundation. Renovations associated with the foundation and the basic structural integrity of the property are inherently costly and can take an extended amount of time—putting your investment property over budget and off schedule. This type of repair can eat into your profit margin and make it difficult to resell the property if that is your end-goal. Any sort of movement of the foundation is a serious problem, so keep an eye out for the following during your walk through:
- Take the time to close the doors and observe if there are any substantial uneven gaps between the door and the top/bottom of the frame
- Look for windows that are out of square or misaligned
- Unlevel floors could be a sing of potential foundation issues
- Note any visible cracks or damage to the exterior of the foundation
Another major problem area is the roof. It is common for real estate investors to conduct an entirely separate professional roof inspection as a faulty roof can present a significant safety hazard and can be very expensive to correct. Be on the lookout for the following signs that could indicate problems with the roof:
- Damaged or separated shingles
- Water accrual or pooling on properties with flat roofs
- Decaying or rotting spots on the eaves of the roof
- Water damage or discoloration on interior ceilings
- Water damage or observable leaks in the attic
It is also important to check the functionality of the property’s major systems to include the heating, cooling, water, plumbing and electrical systems. When it comes to verifying the status of these integral home components, your best bet is to get a professional to check them out to determine if they will require replacement or upgrade in the near future. Here are some questions you can ask and simple steps you can take to ensure there is nothing overlooked during the walk through:
- When were these systems installed?
- Were there additions to the property? If so, were the major systems upgraded or modified to accommodate the added square footage?
- Look for water stains or leakage on the floor
- Examine electrical outlets and any visible wiring
A Trusted Partner
Make sure you don’t miss out on the opportunity to earn passive income and diversify your asset portfolio. The financial experts at Express Capital Financing specialize in developing creative and effective funding options for investors of all experience levels and incomes. Our streamlined application process and years of experience means that you will have access to the capital you need in a fraction of the time it takes traditional banks. Contact us today to learn more about all the advantages of working with Express Capital Financing!