Step1
the most expensive aspects of fixing a home include 1) roof replacement 2) foundation replacement 3) plumbing 4) electrical. When examining a house look at the roof. How many shingles does the roof have layered on it? You can usually layer a roof with up to 3 singles before it needs to be completely replaced. Replacing a roof will cost about 10-15K for a 1,000 sq ft home if you hire a contrator and it adds little dollar to dollar value to a home, so it’s a good idea to check if the roof is in good condition.
I recommend focusing on value added improvements which will add at least $2 of value for every $1 you invest, unfortunately, a new roof does not meet that criteria, so make sure the roof is in good condition when inspecting a prospect home investment.
Note: Some insurance companies will want the roof to have a certain amount of life left on it, usually 5 years of life in order to insure your home. Does the roof have moss on it? If so, this could be a sign of other problems.
Step2
To best inspect the roof go into the attic of the home. Look at the ceiling joists for any water damage, which can be spotted by moisture, mold, water damage rings. This is where your flashlight comes in handy.
Step3
Now that you have inspected the roof, circle the perimiter of the house for cracks in the foundation. A damaged foundation overtime can cause a house to shift and settle. Foundations are extremely expensive to replace and add little or no value to the price of a home. If the house has a basement, you will want to inspect the basement for cracks in the walls which can be an indication of a damaged foundation. Also, there is the obvious slants in the home which are a give away that something is not right. Because slants in the home can be fixed easier and with less expense than replacing a foundation, it is more important to inspect the foundation for cracks rather than worring about a slight slant in the home. Replacing a foundation on a 1,000 sq foot home can run up to 20K
Step4
Next, turn on all the faucets in the house…and I mean all the faucets. What you are testing for here is water pressure. In older homes one problem can be that if the shower is on, the water pressure in another room such as the sink may be compromised. This point is expecially important if you are considering investing in a multi family home…the last thing you want is one tenant complaining about the low water pressure in their shower whenever another tenant turns on the washing machine in their unit. Ideally, you want to look for cooper plumbing. Most fixer upper homes will have galvanized plumbing which is ok so long as the water pressure is good througout the house. Galvanized plubmig tends to corrode easily thereby reducing water pressure. Having new plumbing placed through a house can run around 4K and adds little cosmetic value to a home.
Step5
Next, you will want to inspect your electrical situation. Take your screw driver and unscrew the electical panel. You are looking for rust and fried wires. Rust could indicate that water has gotten into the panel..wich is bad news and fried, burnt out wires are not a good sign. You also want to look at the size of your panel box. Does it have room for additional breakers (those black switch things on the panel)? Often, older homes have small electric panels. Back then, people did not have all the nifty gadges we have so huge boxes were not needed. However, today people have many electrical appliances which require a good electrical panel in order to avoid outages. A new 200amp electrical panel will run about $200.
Are the light fixtures on a pull chain? If so, the home uses knob and tube wiring. Its ok to have this type of wiring, but its outdated and not the safest. Take a look at your electrical sockets, are 3 prong outlets readily available throughout the house? Most older homes, have only 2 prong outlets which may need to be updated to 3 prong to accommodate modern day appliances. Rewiring a home with a new panel, wires and outlets can cost $5-8k for a 1000 sq foot home.
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Comments
wordsmth said
on 1/26/2007 Adequate advice, but some items are incorrect or off-base. For example: Roofing. Many jurisdictions only permit 2 layers; in any case, 3 can put a lot of stress on roof joists. And it should cost nowhere near $15K for a roofing job on 1 1,000 sq. ft. home. Prices vary by location, but get bids--it's more like $5,000 for a 1,200 sq. ft. home. eflores is right that items like roofing, foundation, etc., won't return value. But you've got to know the true fix-up expenses.
eflores didn't mention the use for the screwdriver. One use, beyond unscrewing things, is to check for termites (and carpenter ants, etc.) Look for wood areas outside the house--around doorways, for instance. Jab the screwdriver HARD into the wood. Rotted wood or wood infested with termites will give away like cardboard. And that's another of those expensive-to-fix no-payback situations.
eflores is incorrect about buying a house to flip. Some flippers use real estate agents; some don't. As for mortgage penalties, for gosh sakes get a mortgage that works for flipping. A conventional residential mortgage doesn't. Or, if you're just flipping, get a hard money loan (for instance, 5 points and 16% interest...high, yes, but you qualify on the basis of the property, the loan can include fix-up money, and often the interest and points aren't paid until you sell the property...so it's no money out of your pocket.)
eflores does acknowledge the value of professional inspectors, but suggests that with some experience you might waive the home inspection contingency. NO. Any house can have very expensive hidden problems. And especially homes that you're buying as fixer-uppers or to flip.
proam said
on 2/27/2007 WORDSMITH... do you have an email address where you could be contacted. I'm a novice real estate investor and I'd like to ask you a few questions if possible.