First Time Rental Property Purchase - Quick Question

[Rocky Gibson]

Hi Everyone!

A bit about me - I recently purchased my first home in June, and am now currently house hacking that property. This, along with my sister's background in real estate with 9~ units, got me excited to start learning more. I have just finished Brandon Turner's book on Rental Property Investing, and I am doing my best to build my strategy and get into my first rental.

With that being said - I took the advice of multiple podcasts and went to a real estate meet up. It was awesome to network with all different types of people, and I learned a ton. I ended up connecting with an agent that reached out to me with a potential wholesale opportunity.

The home needs a good bit of work cosmetically:

New floors throughout, interior paint, exterior paint, possible bathroom upgrades?

However - it seems to be a deal that people discuss a lot, and I am capable and willing to do a good bit of this myself. However - there are some question marks regarding the HVAC system, and some mold/moisture damage. I have no idea how to go about asssessing this correctly, and that is my main concern (as of now).

I have posted the calculator that I used below (Sorry BP - I swear I will buy PRO here soon..), and have copy pasted the inspection report.

The ask: Can someone please advise me on how to go about inspecting this appropriately? Also - any other things I may have missed or should look into would be amazing. Thanks in advance for all your help!

This 1996 house appears to be well built with a solid foundation and sound roof structure that has been reasonably maintained in the past with complete replacement of plumbing and electrical systems. There were some water/moisture issues that have not yet been resolved and the HVAC systems are not fully functional.

The key areas of note are (black lettering – info; green lettering – satisfactory comments; red lettering – deficiencies):

1. Appliances:

1. The range/oven appears to be fully operational.
2. The garbage disposal appears to be fully operational.
3. The refrigerator appears to be fully operational.
4. The dishwasher appears to be fully operational
5. Stove hood light is not working. Recommend changing bulbs to ensure fixture is operational.
6. Oven light is not working. Recommend changing bulb to ensure light is operational.

1. Ceilings:
   1. There are several ceiling areas (front of garage ceiling, ceiling seam in master closet, ceiling in master bathroom) that have water stains, water damage, and mold indicating recent/current water issues. The owner indicated that these are caused by the AC system on the first floor, which is currently not working. Recommend determining cause of the water issues, remedy, and repair ceilings.

1. Driveway:
   1. Concrete driveway has both minor cracks and the beginning of significant settling resulting in larger cracks and uneven surfaces. A driveway specialist should evaluate and provide repair/replacement options.

1. Electrical:

1. Circuit breaker panel appears to be professionally wired.
2. Circuit breaker panel appears to be well labeled.
3. Rewiring of entire house was apparently performed within the last few years.
4. All of the smoke detectors in the house are barely working (they give off a very low noise indicating they have not been used or tested in a very long time) and they are not located in all the places required by current safety standards. They should be located outside all sleeping areas (hallway), in common living areas on each floor, and in each bedroom.
5. There does not appear to be any carbon monoxide detectors. Because there is gas in the house, recommend they be placed in hallways outside sleeping areas and by the gas furnace and water heater.
6. The outside outlet on the back of the house near the basement exterior door is not GFCI protected. This was apparently an oversight when the house was rewired. Recommend adding a GFCI protected outlet.
7. The outside outlet on back deck is loose and not secured to the house. Recommend re-securing outlet box.
8. Outside outlet covers are old type which do not provide weatherproofing when the outlet is in use. Recommend adding a weatherproof cover that protects the outlet when a cord is plugged-in.
9. There are many lights in the house that are not working. They are most likely burned-out light bulbs. Recommend replacing bulbs to ensure all fixtures are working.

1. Fireplace:

1. There is a gas starter, wood fireplace that appears to be fully operational.
2. The flue is mostly clean with some very minor creosote– satisfactory.
3. Damper clamp modification is missing. Because there is gas present, current safety practices require a damper clamp that prevents the damper from closing completely, thus allowing any gas to escape instead of flowing into the living space. Recommend adding a damper clamp. This is an inexpensive fix.

1. Foundation:
   1. Foundation has minor vertical and step cracking that does not appear to have any structural implications. Recommend sealing and repainting outside foundation wall. Then monitor to ensure there is no further settling/cracking.
   2. The cement covering on the foundation on right side of the house is deteriorating, cracking and coming loose. This does not appear to be a foundation structure issue and should only require removing/reapplying foundation covering. Recommend a foundations professional evaluate and provide recommend solution.

1. Garage

1. There are water stains and current indications of mold on the ceiling of the garage near front right door – see comments on ceiling section above.

1. Gutters/Downspout

1. Gutters on the house are in need of cleaning and re-securing to eave in some areas.
2. Right rear downspout is disconnected and laying on the ground. Recommend reconnecting.

1. HVAC System:

1. The HVAC systems consists of 3 components – 2 furnaces (manufactured in 1994 & 1994), 2 AC evaporator coils (manufactured in 2015 & estimated in 2001) and 2 AC condenser fans (manufactured in 1995 & 2001).
2. The 1st floor furnace is not operational and 2nd floor AC is not operational.
3. The ages of all systems, except the 1st floor AC evaporator coils, are well beyond their average life. Recommend a professional HVAC professional evaluate for repair/replacement options.
4. The insulation on AC condenser fan refrigerant lines are damaged and require replacement. This is a low-cost fix.
5. The condensate lines for both AC systems drains too close to the foundation behind AC condenser fans. This may cause water to pool near the foundation and penetrate into the basement. Recommend extending lines 5 or 6 feet away from foundation.
6. Note that there is no HVAC ducting/vents in what appears to be an otherwise finished basement.

1. Inside Trim:
   1. Trim is missing on 2nd floor bathroom inside door jam and along baseboards and will need replacing.

1. Pests:
   1. There were 8 bats hanging outside mesh wire in gable over master closet in attic. It does not appear that they have entered the attic. Recommend a pest removal professional inspect the other gables and recommend removal solutions.

1. Plumbing:

1. House supply plumbing appears to be PEC piping which has recently been installed. Sewer pipes appear to be PVC and also in satisfactory condition.
2. Inside main water shut-off valve and water pressure regulator are located on basement sealing under dropped ceiling near front right side of the house. This is also the location of the inside hose bibb shutoff for the hose bibb on front of house.
3. Water pressure is approximately 60 pounds per square inch (psi) which is satisfactory (normal range is 55-75 pounds per square inch). Pressure can be increased to 75 pounds per square inch if additional water pressure is desired.
4. There is no emergency water pan or piping to the outside under the washing machine. This could result in extensive damage to finished parts of the house if the washing machine fails. Recommend adding a pan under the washer that is routed to the outside.
5. Outside hose bibbs are not securely attached to the house. These faucets were disconnected when new water piping was installed and never re-secured. This could lead to broken pipes. Recommend re-securing.
6. Back outside hose bibb does not have an inside shut-off valve. This is important so hose bibb can be shut-off during freezing weather to prevent pipes bursting. Recommend adding a shut-off valve (this should have been done during recent replacement of water pipes).

1. Outside hose bibbs do not have anti-siphon devices. This can result in water in hoses reentering drinking water if there is a loss of water pressure and is considered a potential safety hazard. This is an inexpensive fix.

Example of properly installed anti-siphon device.

1. Porch:

1. The front porch front is missing the threshold step which appears to have been removed for some reason which has caused a gap around the pad where it connects to the house foundation. Step from threshold to porch (riser) is greater than current safety standards (maximum 7 ¾ inches). Recommend having a step added and sealing around pad connections to house foundation.
2. Wood back porch corner posts are secured with nails rather than double bolts. Under current safety standards nails do not provide sufficient support to ensure railings are secure for leaning or any significant weight. The railings are currently loose. Recommend a decking professional evaluate and properly secure.
3. Protective covering on wood floors and stairs on back patio are reaching the end of its protective life and wood is beginning to deteriorate. Recommend retreatment to extend life of wood.

1. Roof:

1. The current roof appears to be approximately 10 years old and in satisfactory condition. Estimated remaining life is approximately 15+ years. See notes above on water stains/damage on ceilings – these have been attributed to the AC system, but you may want to ensure there are no roofing issues contributing to these water stains.

1. Siding/Eave/Trim:

1. Stucco siding appears to be in satisfactory condition on the front of the house with no indication of cracks or issues. Overall the cement fiber siding on sides and back of the house are in satisfactory condition. Some cement fiber siding planks have been replaced and need painting. Overall repainting of cement fiber will be required in 3-5 years.
2. Wood eaves and soffits are in have some areas that are damaged and all areas are in need of repainting.
3. Paint on wood trim around windows is beginning to peel. Recommend treatment and repainting.
4. There is a hole and damage on chimney chase siding/trim. Looks like it was caused by a woodpecker. Recommend repair and repainting.

16. Water Heater:

1. The water heater (manufactured in 2016) is fully operational (water temperature approximately 135 degrees on hot setting.

17. Windows and doors:

1. The windows in the house are double pane, single sash, metal windows.
2. There are numerous windows that are fogging indicating a broken seal. This can result in increasing fogging, energy costs, and noise. Recommend replacing affected windows.
3. The insulation seals around the windows are deteriorating. A window professional should evaluate and recommend possible solutions.
4. Some of the windows are difficult to open/close due to sticking side sash mechanism. These need lubrication/maintenance.

Please let me know if you have any questions or if I can be of further assistance.