You see the right potential property for the right price in the right place. You decide to write an offer on terms that suit both your immediate and long-term investment goals. Unless you are an experienced general contractor, it will pay you to get expert opinions on major elements of the property. There are two primary reasons for this. You want to:
- Avoid investing in a property that will, either immediately or soon, need additional investment in major repairs and renovations.
- Ignore the possibility of negotiating a lower price or to have the current owner pay for those improvements.
Who Should Walk Through the Property?
There are some obvious professionals to hire:
1. A Licensed Home Inspector
Many people become licensed home inspectors and can do a first-class inspection. Unless you know a trusted professional, you may want to interview members of the American Society of Home Inspectors (ASHI). ASHI members are not only skilled and experienced, but they work to a high set of published standards. They also keep up to date with changes to building code.
2. A Building Contractor
Licensed contractors understand current building code. They also know how to investigate structural issues such as walls, roofs, and foundations for potential or current failure. While the roof, for example, may pass a home inspection because it is “safe and functional” on the day of inspection, the shingles may be coming towards the end of their useful life. Replacing a roof in a couple of years will be expensive.
3. An HVAC Specialist
The A/C and furnace in a home work hard all year long. Most owners and tenants change the filter but fewer have semi-annual inspections. Inefficient systems cost more to run, and that may be a sign of future failure. An HVAC professional will check out everything including if the condenser has enough refrigerant, and what type of refrigerant. Many municipalities want to get rid of old refrigerants, so topping-up will cost more and, one day, the condenser may have to be replaced completely.
4. An Electrician
Replacing GFCIs is no big deal, and making sure the home is properly “grounded” is also easy. But older homes may have, say, some aluminum wiring which will have to be replaced if any future renovations are done. A previous homeowner may have installed new wiring that is not up to current code, so there could be a potential fire hazard to look out for.
5. A Plumber
Old pipes and water heaters may increase the possibility of a future leak. No landlord wants to get an emergency call about a damp ceiling or a flooded basement. In addition, some older properties were plumbed with, for example, KITEC water lines. KITEC is no longer approved material, so apart from potential leaks, a plumber will not be able to alter the system in any way if you ever wanted to renovate or install a new bathroom for example.
Investing is a great way to create wealth, and owning good properties is a good way to help a community look good and attract good tenants. Checking important structural and functional items before the final agreement is both a sound negotiating strategy and a safe investment process to adopt.