Quick evaluation of a potential rental property investment
One common question: What am I looking for when I tour a potential investment home?
Good question. There are lots of things to look at when you consider a purchase of a rental home, but let me give you my quick list that I have created for a fast evaluation of a property for purchase.
I tend to focus on the "big guns" first. I look at high dollar items that will quickly add a lot of cost to the transaction. Here are the things I typically inspect:
- How old does it appear? Most roofs last 15-30 years depending on the shingles
- What type of shingles are there? 15 year flat shingles? 20 year? 30 year architectural shingles? The more expensive the shingle, the longer it usually lasts.
- Do the shingles appear well intact? Any dents? Any ruffles? How is the flashing?
- Roof angles and pitch - the simpler it is, the cheaper it is to redo.
- Have they been replaced with vinyl? On historic homes, old windows can be beautiful if in good condition. Equally, they can be a disaster if they are spent. Drafty, high in cost to maintain, dysfunctional and difficult to use. They are also fairly expensive to replace.
- How many windows? This can add up quick if there are a lot
- How big are the windows? You guessed it, the bigger they are, the more they cost to replace.
- How old is it? Look for a date on the machine. That date is usually the date it was made, not installed, but it gives you an idea.
- Older homes often have additions. Are they ducted for central heating and air, or are there window and electric heating units? It costs money to re-duct systems, and often, there are difficulties with tight spaces to do so.
- Does it work? Check the thermostat and see what the response is.
- Do a quick round about look. Do you see crumbling? Shifting in the brick or blocks? Do you see "step cracks"? These are cracks that follow the bring stacking line and zig zag up the brick. These can be signs of serious issues. Though anything can be repaired, the question becomes what the cost will be?
KITCHEN & BATH(S)
- Surfaces - what countertops are there and what are their condition?
- Appliances - condition, age, functionality, style?
- Shower and Toilet - condition, style, and function (make sure the water is on at the house before testing that)
- These are things that quickly add up to high spending if they are dated.
- Are there hardwoods? Big bonus if there are. Hardwoods are expensive, but their condition matters too.
- Ceramic tile? If well done, this material can outlast a lot of other floorings, but can also become dated fast.
- Are they level? In older homes, you can expect some settling of the floors and this is forgiven. However, some settling does not equate floors that are all over the map. Usually, if you see very uneven floors in a home, there is a chance that the foundation is compromised or there has been a water incident in the home and there could be rotted joists beneath the floor. Both are very costly to deal with.
I hope that helps give you some insight in how to quickly sum up a property in terms of financial risk to invest. Clearly, this is a minor overview, but it is my "go to" list to quickly tally what a house might take to make it a home for someone special.
Seize the day and we'll talk soon!