Should I get an inspection?

Question

Though I've researched this topic, many of the posts were not only older but had mixed oponions, so I'd like to raise it again. I'm a new investor working on a possible first deal. I'll be buying a buy and hold property 2 hrs away from another investor who has presented all his projected numbers to me. These numbers included an estimated rehab from  GC he has used for several years. I noticed the contract said as-is with no option period. When I asked him about doing an inspection he said that is what the GC did and that no inspection is necessary. I realize a GC is not necessarily a licensed inspector, so should I ask for one or not? As far as I can tell, the property has been vacant for about a year and the utilities are likely off. How did the GC inspect the oulets, HVAC, water heater, etc. with no utilities. Just a little concerned and wondering what you would do?

Frank Jiang · Answer

This isn't even a question.  You absolutely get your own independent inspection.  The seller's opinion is irrelevant because he is not an unbiased party in this transaction.

A more important questions is: why has the property been vacant for a year?

Ralph R. · Answer

@Chad Tate  Chad are you buying this from a wholesaler and if so how long has he been doing realestate??  Why is he selling this property if he just bought it??  The more you talk the more I smell smoke.   RR

Chad Tate · Answer

@Dave Carpenter, thanks for the tip!  I know I'll make mistakes, but I'd rather not make silly mistakes on my first deal by not taking advantage of this awesome resource and posting my questions.  I'm not sure why the property sat vacant, but I'm almost certain no utilities are on, so I'm not sure how the GC would have even been able to test anything.  Thanks again!  Oh, and I'm impressed by your bio!  God bless!

Ralph R. · Answer

@Chad Tate  I get several estimates but I don't buy major rehabs usually my PM handles carpet flooring paint etc. what I'm saying is something major is Likley wrong with this property. Find out what it is!!  It is your business what the seller paid for the property. Check the county tax records  you can find out there. Your realtor/ lawyer can find out for you. RR

Chad Tate · Answer

@Frank Jiang, once again, you're telling me what I already knew in my gut, so thank you.  You're right, he's not my friend, but seems very excited for me and this potential deal.  Maybe he's more excited about what this deal will do for him!  He wasn't the one sitting on the house for a year; he just closed on it last week, so the public records aren't updated yet to see what he paid.  But again, as long as my numbers look good, I guess it doesn't matter.  Thanks again!

Frank Jiang · Answer

Feel free to post details on the property in another thread including purchase price, items that need rehabbing and the price you were quoted for fixing them.  You might get someone with more experience and understanding of local prices to confirm or refute how realistic the numbers are.

You can see how much the seller paid in the title report, that is public information.

The fundamental question is, if it's profitable to fix the house and rent it out, why has the current owner not done that?  Why did he instead choose to let the property remain vacant for a year, draining holding costs which is a guaranteed loss?

You say this individual is a friend of a friend.  Put more simply, that means this individual is not your friend, he is not necessarily looking out for your interests at all, and you shouldn't take anything they say at face value.

John Thedford · Answer

@Chad Tate you are very welcome!

Chad Tate · Answer

@John Thedford Thank you for the reassurance!  The way I figure it, if/when I go to sell, the buyer will most likely get one and then what will they find for which they'll want me to payr???  Or even worse, what if the AC goes out during the first x months since the electricity wasn't on to test it.  After seeing the first few responses, I'm feeling a little silly for even asking...but it's nice to get the reassurance that my initial thoughts were correct.  Thanks again!

Chad Tate · Answer

@Frank Jiang It's a relief to see you say that. I really knew that was likely the answer, but looking at some older posts on the subject of inspections, some have made it seem like it's optional to take out as a contingency in order to get the deal. I just personally don't feel comfortable with that, especially being my first deal.

@Ralph R. I thank you too for affirming what I felt was the correct answer.  He is a friend of a friend and I really think he's trying to help and push me out of my analysis paralysis, but I just felt uncomfortable about it.  I know he's making a pretty good cut on the price of the house, so I'd really like to know what he paid for it, but I guess it's none of my business as long as I do a proper analysis and make sure it's right for me  (that's a whole other discussion, as I'm still new to BP's worksheets).  You mentioned not to buy until I know how much it cost to rehab.  Do you ever trust a rehab estimate from someone you're not familiar with.  If not, I'm wondering how people do out of state deals.  Regardless, I'm anxious to do a deal, but I want the first deal to be a positive experience.  Thank you both for taking the time to reply.

Should I get an inspection?

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