There seems to be one commonly asked among those who are interested in real estate investing, particularly in flipping properties. Is a real estate inspection is really necessary? Yes, or no? The long and short answer to that question is absolutely and I will do my best to explain exactly why.
What is it?
First of all, what is an inspection? A real estate inspection is the act of having a qualified (and in many states, licensed) professional take a look around the property you are considering. That inspector would inform you of obvious and potential damage or problems with the property. This is not something you want your uncle Bob doing! You will want an inspector that has had training and experience. This will ensure that they to know what to look for and know what those things could mean.
Many who are planning to flip properties enter into the situation (particularly first time flippers) with a common attitude. This is that they know there are problems with the property, and that is why they are purchasing the property. The problem is that the untrained eyes may miss some problems that should be addressed first.
For instance, if there were obvious signs of plumbing problems that could result in a leak behind the wall. You wouldn’t want to paint that wall or replace the floors until you had the possible leak checked and either confirmed or denied and repaired if necessary. What if you don’t do it in that order? You would likely need to undo the work (wasting both time and money) that had already been done.
Before or After Placing Bid?
Inspections are great before placing the bid on a house. Why? Because they actually give investors a bargaining chip. For the true (at heart) investor, this is a fact that simply cannot be ignored. It directly affects the bottom line price. Does the roof need to be replaced? You are justified in offering a lower amount. What about the electrical system? Does it need to be updated? This is something that should be adjusted or amended in the final offer. These are also things that are easily identified by a qualified and competent property inspector. Anything that can save time and money is great when investing in property. An inspection can do both!
Count the Total Costs
Another great thing about a good property inspection is that it often sheds light on the amount of money that will be needed to get the house in good working. Knowledge is very important in this line of work. It can mean the difference between taking on a project or walking away if the expenses would be too great to turn a decent profit. As an investor you should never take on a property that is pretty much guaranteed to be a failure. It is simply not a wise financial move to make. It doesn’t matter how much the property calls to you on a personal level. In the business of investing, the bottom line is the only call you should be taking.
More importantly, a proper home inspection can inform you of potentially hazardous conditions within the home. These are sometimes hard to spot to the untrained eye. What are some of these things? The list would include toxic mold, which can be financially disastrous as well as hazardous to your health; foundation issues, and structural damage that is threatening the integrity of the property.
An inspector should also notice the structural integrity of homes that could affect your home if they are weakened or fail all together. While these things seem so simple, it is often the simple things that lead to the greatest disasters. Whether or not you realize it, a good home inspector is one of the best tools you can have in your arsenal when it comes to flipping real estate as an investment venture.