Home Inspection - Need Help Deciding what to do!

[Kelli Standekar]

Hello Bp Community,

I'm in the process of purchasing my first rental property (Duplex) as a long-term buy and hold. I met with the home inspector this morning and after reviewing the property and report, I have a couple of concerns regarding his findings. As this is my first deal, I wanted to get help from more seasoned investors on weather the damages found are a deal breaker or only cosmetic repairs that could be fixed over time. I am especially concerted about the following items:

1. Water in bedrooms. - Home Inspector said it could come trough holes in the vinyl siding (water build up behind wall) on the front of the home and leaking into the bedroom. Not sure if I buy that.

2. Stains visible on the roof structure - Roof Leak?

3. Loose wiring in the attic - Fire Hazard?

4. Broken windows and trim - Expensive to replace?

5. No ventilation over stove or in bathroom - Moisture built up in home leading to more damages?

6. Missing or damages smoke/fire detectors

7. Water heater from 2004 - Needs to be replaced at any time?

I would greatly appreciate any input or thoughts anyone has with regards to the issues (and corresponding pictures below). The duplex was built in 1975, 759 Sqft, 2-bed, 1-bath (each unit). We are under contract for 100k, sellers is paying 3k in closing costs and will provide 1.2k after closing to repair some of the damaged vinyl siding up front. Market rents in "as is" condition around $500 - $550 each (currently rented only for $450 and $425). After fixed up (New heating units, floors, paint, siding...) around $650-$700.

After reviewing the home inspection report, should I walk away from the deal? Reduce the price? Get seller to fix some of these items before closing? Thank you again for you thoughts and suggestions!

Thank you in advance for your feedback, it's much appreciated

[Daniel Lane]

@Kelli Standekar

I just went through a similar situation with a property I had under contract. I ended up backing out of the deal after the inspection because some repairs were too large and the numbers I was running stopped making sense.

In your case you need to re-evaluate the numbers and make sure they still work for you. If you have the capital to take on this house then I say go for it but just know water damage can be a lot more than what meets the eye, especially when the damage is seen inside of the building. To me that means that mold could be all over the building where you really can’t see it and that might not be fun to take care of when you are trying to move tenants in right away.

As mentioned above, all houses have their issues. That is why it is so important to run your numbers and make sure they make sense even assuming the most expensive repairs. If the numbers stop making sense, take the money and run.

You mentioned that you are wondering if these would be things that you could fix up over time? My guess is probably not. So if you don’t have the money right now then probably not a good house for you personally.

Also, assuming you are still in your inspection period of the contract and have time, I would bring in a contractor or specialist to take a look at the water damage and give you estimates on what it would take to repair and eradicate mold.

Biggest concern is the water damage and what caused the water damage. Other issues can be solved quickly. Just my two cents.