Inspection: What do you look for to avoid MAJOR losses?

Question

I'm going to a triplex open house this weekend that I am very interested in. It is also my first short sale. This property is 80 years old, so I want to be especially diligent.

When you are checking out a property, what are a few of the things you look for to avoid major losses down the road?

While my ego thinks I can walk around the property and do a sufficient analysis, I'm planning on creating a checklist to make sure I don't miss anything.

Account Closed · Answer

my big things are plumbing and electrical..most of my apartments don't have ac so i'm not too worried about that..i look to see if it's copper or aluminum wire inside the service, and then inside a few outlets to see if it has been pigtailed or if it runs throughout the property...i also look to see when the service was updated, and if there's room between the interior and exterior boxes to add dryers, electric basesboard heat, etc.  i get higher rents by adding washer dryer connections...since it's multifamily, look to make sure there's 3 meters for electric, water, and gas..otherwise, you're paying for their utilities!  i check for large cracks in the foundation and/or brick walls..i don't care about minor stuff, but if it's 3/8 of an inch or thicker, i want to get a foundation or structural engineer to check it out..i always like to ask tenants what sorts of problems they've been having as well..this owner or agent may or may not allow it, but it gives you extra ammo to reduce a price and also lets you know what's really going on with the property..good luck  :)

Ibrahim Hughes · Answer

One thing I haven't seen mentioned: UST's (Underground storage tanks) that typically store heating oil. Huge issue up here in the northeast. Failure to test for the presence of one and either decommission or remove it (particularly if filled with oil), can run into the the 10's of thousands of dollars if it's leaking.

Home inspectors typically don't test for these. You can ask the seller if they have information on there being one. They likely won't have any info. But if they do in writing then have your attorney analyze the report. Either way I would still have my own company come out and test for the presence of one (for a cost of $250 here).

Michael Quarles · Answer

IMHO the most important thing is to lock the unit up into contract and use your inspection periods to either confirm or disprove your assumptions.

I created an "Ugly" form that may help. Also there is a walk-thru check list that may be of benefit.

"Ugly: http://www.michaelquarles.com/Repair_Worksheet.xls
Walk-Thru http://www.michaelquarles.com/contract_walk_thru.pdf

Joel Owens · Answer

Chris I meant Clay pipes but different parts of the country used different things during different eras because of cost,availability,closeness to the area where constructing,soil conditions,etc.

Either way in my mind a critical inspection is to scope the line all the way out to the street.Some plumbers only have a 25 ft camera and others have the big one that goes hundreds of feet which will reach out to almost all mains at the street before running out of camera line.

On environmental stuff mentioned you sure can have situations where next door is a laundry facility or gas station that is now vacant.The contaminants leach over into your soil.Now the EPA is demanding you clean it up which becomes very,very expensive.

What to look for comes with experience.I have found it is better that I learn from my plumbers and other professionals I use and they often share tips for free.

Here in Georgia inspectors do not have to be licensed (it might have changed recently)but in the past they were not required to be.

I have found I have more knowledge than many inspectors and all they do is charge a bunch of money and then refer you off to the people I have already learned from.My guys will take a look at it for free because they know it is future business I will be giving them.I just call them in if I have a question.

James H. · Answer

Clay pipe was used for sewage up to the 1950's. The material lasts forever, but it is very brittle and is susceptible to damage if disturbed. This pipe is constructed in (relatively) short sections so lots of oppertunities for leaks that can't and don't necessarily need to be fixed. However, these leaks attact tree roots and those roots will be nearly impossible to remove without breaking the pipe if they are clogging the line. Root growth itself will break the pipe. Usually if you have a problem with clay pipe, it results in replacing the entire line from the building to the street with PVC. PVC is cheap, but digging the trench and connecting to the sewer, permits, licensed plumber - not so cheap.

Joel Owens · Answer

That age  of  a building foundation,clay pipe going into the building form the street,weeping (ground water system) to get water off of the building.

How close are the trees and root system and how tall are they?? Too close and the roots can start cracking the side walks and foundation.

Roof- Any water leaks on the ceilings?? Interior plumbing leaks..Has damaged been cause to the drywall over  a leak?? Age of all the mechanicals?? Electrical knob and tube wiring,up to date,or mixed in??

Asbestos,lead paint,improper ventilation for HVAC and needs sealing for leaks or larger runs or changing of vent locations.

I could go on and on.Was an update completed?? Was it up to code and were permits pulled??

Being fixed incorrectly is usually more expensive than having to fix a problem.The reason is I have to go in and UNDO a problem versus updating it.

I liken it to when I worked on car audio.A guy comes in and I replace a radio that hasn't been touched.Test the wires and install.Another guy comes in and says radio needs work and I had it worked on but it's not working correctly.Go in and pull out 2 bags worth of wires running everywhere and takes me 3 times longer to fix.

Does the place have a rodent infestation?? Does the existing tenants keep clean?? Are the tenants section 8?? If so you can get a picky inspector on an old building and some items regular tenants would be fine with you have to fix to get the section * payment.

Joel Owens · Answer

The bank might not have one on a triplex but on 5 units and up usually if a bank might be foreclosing they order a phase 1 report so in that case you wouldn't have to pay for one.

The bank wants to know their liability if they have to foreclose and take the property back.Sometimes they will not foreclose and look to sell off the note or some other arrangement.

James H. · Answer

If you are concerned about unknown contaminates, about the best you can do is pay a consultant to do a phase 1 environmental assessment. My company has a department that does these. The price varies, but for a single building property I think they would run in the 2000 dollar range. I'm sure some companies and independent guys can do it cheaper.

Chris Masons · Answer

Good call. We had an UG oil tank on a 2 family here in NJ (built in 1950s) that was still being used. Once I aquired the property we converted to gas and had tank filled with sand soil samples taken and the town signed off on it that it was properly abandoned.

It was a biiger tank 1000 gal. that took up good paart ofo fron lawn and then underneath part of the driveway. To rip it out would have made a big big mess.

Chris

Chris Masons · Answer

There use to be piping referred to as orangeburg pipe used here in NY,NJ and PA and I am sure lots of other places up until around the 40s I believe. also knon as fiber conduit. It was made from wood pulp and pitch and was commonly used as sewer laterals from house to the cirt main. It also was used in plenty of other plumbing applications like runs where gutter downspouts would connect into the ground and run to the street.

Joel, when you say clay piping is this what you are referring to? OR do you actually mean clay?

thx!
Chris

Inspection: What do you look for to avoid MAJOR losses?

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