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Inspecting The Physical Condition Of A Landed Property
Unlike buying newly built condominiums that have a minty flavour, buying resale landed properties can be a tricky affair.
The physical condition of the place have been subject to years of use and abuse from owners, tenants or landlords. Owners do not always treat their homes like a baby. Tenants may neglect taking care of it because it is not really their home where they feel belonged. And landlords may neglect it as it could be just another place they collect rental from.
The physical condition of a landed house can vary in the range of very poor to very good. If you are buying one for investment, the ideal condition should be one that falls somewhere in between the 2 extremes.
This gives you an opportunity to undertake improvements to increase it’s value while not requiring you to conduct a total revamp to stop it from falling apart. Major works will also take up more time increasing your opportunity costs.
A skill of identifying minor and major aspects of the property you have to rectify will be key to making your venture a rewarding one.
As appearance has a tendency to deceive, you want to find properties that aesthetically looks worst than they really are. You are specifically looking for properties that are in desperate need of cosmetic repairs only. These are issues that can be easily and quickly be resolved with lowest costs.
Although sellers are not investors like you, they are not stupid as well.
So avoid insulting their intelligence by making low ball offers citing cosmetic problems as your reason. You run the risk of making yourself look like a cunning wolf or an innocent sheep new to real estate.
Sellers of houses in poor condition understand that you will be forking out a substantial sum of money to fix up the property. This is why they are ready to compromise on price.
While choosing one that is in good physical condition may seem like a straight forward preference, a lot of investors actually prefer to buy properties that are in poor condition.
Properties in poor condition are often referred to as “fixer-uppers”.
But bear in mind that the cheapest bargain in the neighbourhood is not the best value buy in many cases. Landed homes selling extremely cheap can only imply one thing. It will take up a huge amount of time and money to transform the house from a miserable state to a cheerful one.
Leave these basement bargains to the newbies. You are better than that and will only go for those that have the best upside from the least input.
There are many reasons why an investor may prefer fixer-uppers. Some of the main reasons are:
1) Can negotiate for a better price with the seller
2) The fun of fixing up a landed property
3) Buyers are flippers whose objective is to enhance value and sell
When your objective is to keep the property for renting out and don’t mind getting hands-on with managing extra tasks, buying a house that requires a little work instead of a ready-made one could become a very profitable property play. There are some advantages why you want to do this.
1) You have a bargaining chip to haggle for a better price with the seller
2) You spend a minimum amount for required repairs and improvements
3) You minimize the time required to fix up the place
When we put these factors into play the best buys will be homes that look much worst than it really is. Properties that fit into this category are usually those that only in need of aesthetic improvements. These improvements might just be housekeeping, new paint, landscaping, gardening, etc.
How do you know all a property needs is a cosmetic surgery? By physically inspecting it of course.
Here are the key items that you have to scrutinize while wearing your Sherlock Holmes’ Hat. Even if sellers prepare their properties properly before your visit, there are clear signs of problems that are difficult to hide.
When your property is a private landed one, a suspect foundation is your own problem which have to be solved with your own time and resources.
Landed homes with suspect or weak foundation must be avoided completely. Rectifying property foundations are both costly and time consuming.
If we take for example, a house that is standing on concrete slabs and settling exists, the whole house has to be leveled. The good thing is that houses with foundation problems often leave visible clues that something is wrong.
Cracks often appear in homes no matter if there are any foundation issues. Hairline cracks might just be another day in the office. But when you see large crack that can fit a cute kitten in, it is almost certain that there is a foundation problem unless the owner has a good excuse why that is so.
Other signs that show a weakness in foundation are brick walls that are out of alignment or window frames and doors that are out of alignment as well.
Homes with basements are prone to moisture problems.
Again, do not make a big issue over small cracks. Every home will have cracks in some place. But in places with moisture problems, you will be able to see some evidence of leaks in the cracks. These leaks can lead to harvesting of mould.
The expensive nature of repairing homes with foundation and moisture problems should be enough to convince you not to buy any properties with any of these issues.
It is just not worth it. There are many properties in the market that does not require you to take on these issues.
Roof repair is a major cheque book killer. Roofs usually have a pretty long lifespan. The costs of roof repairs varies with it’s condition and age.
Shingles for example usually have a lifespan of 20 years and beyond.
This means that if the owner claims that the existing shingles are 10 years old, you will not have to replace it anytime soon. Discoloured roofs are not unusual and can be easily fixed with a thorough chemical wash or bleach.
If you indeed have to take action on the roof, explore whether it is possible to place one over the existing one. This can save you considerable money compared to tearing it down and fixing a new one.
The obvious method of inspecting whether there is a problem with the roof is by looking for leaks. Inspect the ceiling to look for water stains. If there is an attic, go up and check it out. As long it serves it’s main purpose, you should be safe.
Conduct a thorough check to see if everything is working properly. Flush toilets, do a test run on all the taps, turn on the water heater, look for signs of leaking pipes, etc.
In older homes, do a check on whether roots from trees will potentially cause problems for your piping. Trees are something that can cause extensive damage to landed properties.
A big ticket item concerns the sewage system. As sewage runs underground, a major problem can mean a huge job on your hands. An innocent looking crack on the ground could be the cause of catastrophic sewage problems in future. If you really need to buy a house with sewage problems, buy on the condition that the owner fixes it.
Fixtures and appliances
Common items that suffer from wear and tear are windows, doors, air-conditioning, walls, etc. Learn to figure out what kind of repairs are necessary so that your costs do not add up to the hill.
For example, a wall that needs a paint job is less costly than one that requires replacing. Air-conditioners that just require a chemical wash is surely preferred than one that needs replacing.
You can easily do a basic check on a home’s electrical wiring by flipping all the switches and testing out all electrical power points.
As long as they are working, there should not be any major problems to attend to. You have to be meticulous for houses that are much older. Electrical items can wear out and need replacement.
Old wiring that are completely worn out might also need replacing. Overhauling electrical wiring can be costly as they require electricians to line up wires behind or within ceilings and walls. This effectively means that you have to spend on walls after spending on wiring works.
Although you will start evaluating properties with an eagle eye with a little experience, it is best that you get a professional to conduct an inspection before closing.
If you have to make an offer fast as you think moving fast is critical to secure the house, make sure to include a clause in your agreement with the seller that states that the deal is on condition that your property inspector returns with a satisfactory report before closing.