While getting a property inspection done on a property you are thinking about purchasing may seem like a total nightmare, the property inspection is arguably the absolute most important thing you can do as part of your due diligence.
Question: What are the costliest expenses of owning an investment property?
Answer: 1. Unexpected repairs, and 2. Bad tenants (if a rental property).
The expense of bad tenants — well, that’s a topic for a whole other article (and potentially a long one, at that). Unexpected repairs, though… here we go!
The Purpose of Getting a Property Inspection
Don’t make me say it out loud… okay, fine I’ll say it. The purpose of getting a property inspection is to confirm the true condition of the property before you buy it. Yes, I know, it’s a bit obvious what the property inspection does. I say it, though, because it ties into a lot of smaller facts that surround the whole point of knowing the true condition of the property. Also, did you notice that bolded word there — before? That is a key word to remember.
I’m amazed at how many times I’ve heard people asking if they should have a property inspection done on a property they are thinking of buying. I’ve also been amazed at how many people ask how the numbers on a property sound, but when they describe the property and the numbers, they are only guessing at what needs fixing on the property. Umm… I mean, yeah, when you are first looking at a property, you are probably going to run rough numbers through your head so you can take a first wag at knowing whether or not it will be a good deal, but if you are to the point of asking other people to go over your analysis of the property in order to get their opinions on the deal, you need more concrete numbers!
Getting a property inspection on a property is the best way to get at least a working idea of what repairs will have to go into the property. Don’t for one second take this lightly because repairs can be extremely expensive! I don’t care if you are buying a property to flip to have as a rental property, to have as your own, anything — if you are buying a property of any kind, get a property inspection. If you are buying an investment property, the bottom line has everything to do with how much money you make on the property, and how much money you make is directly connected to how much you have to pony up in repairs.
How to Find a Property Inspector
As with anything, I’d first recommend asking for referrals from fellow investors who work in the market you are in. The BiggerPockets Forums are perfect for this. If you can’t find any referrals, don’t hesitate to look on Yelp. I use Yelp for just about everything, and property inspectors are no exception. But if you can’t get a referral and Yelp isn’t giving you much, just Google home inspectors in your area and get a list of local inspectors. Then start calling each one.
Find out how much they charge, if they work specifically in the neighborhood you need them for, what their experience level is, and whatever other questions you want to ask. Also ask their availability. You can ask all the questions you want, but also just listen for their general tone and gauge your own interest and comfort with them. You won’t have to spend a lot of time with your inspector, but as with any customer service related position, it’d be nice to enjoy working with them.
As far as what makes a good or bad inspector — well, that one is a little tougher. Obviously a bad inspector is one who doesn’t catch something major during his inspection, and you end up having to pay out for it later. Now, how do you tell who those bad inspectors are? I have no idea. That leads me back to suggesting you get referrals.
If you want to be overly cautious, you could always hire two separate inspectors and pay for two separate reports to make sure everything is caught. I’ve never known of someone to do this, but I certainly don’t think it should be out of the question. Sure, it would be double the cost, but even that total amount is pennies compared to what an unexpected repair could cost.
In terms of determining if an inspector is good or bad, go through the report he gives you pretty thoroughly. You will likely be able to at least get a feel for his level of detail, how honest he’s being (if he’s honest about some pretty big things, he probably doesn’t have a reason to be dishonest about other things), and if you have any questions about his findings, he should be able to explain those easily for you. Inspectors often prefer you not to be there during their inspection, as it can be extremely distracting, but if you are ever at a property while the inspection is being done, you are likely to learn a ton — from a good one at least.
I’ll tell you, the best inspector I ever had was when I was buying turnkey properties, and the inspector absolutely hated this one particular company I was buying from (who are long out of business now). This worked out great for me because he wanted to find every way he could to stick it to the owner, and what better way to do that than to not miss a beat on anything that needed to be fixed because he knew it would be at their expense, not mine? Ha. Okay, maybe that’s not the most helpful for you in terms of finding yourself a good inspector, but funny nonetheless.