When it comes to real estate investing, the ideal investment property is not solely dependent on a profit-bearing market with a potential for above-market returns; the property’s overall condition is a significant factor that real estate investors need to consider before buying.
To assist you in this endeavor, the team at Express Capital Financing has built a convenient checklist to reference when conducting a property walk-through.
What is a Property Walk Through?
A property walk through is an inspection of a piece of real estate conducted by a potential buyer, often with the real estate agent, prior to purchase. The purpose is to evaluate the condition of the property and identify any potential issues that could affect the value or usability of the property.
During a walk through, the buyer will be looking at both interior and exterior aspects of the property, such as its structure, fixtures, appliances, grounds, and safety features.
Why the Walk-Through is Essential
The primary thing to keep in mind during the walk-through is to take your time and focus your attention on the important property details that could make or break a transaction. Adhering to a property inspection checklist can help you narrow down potential options and lead to profitable investment assets.
By pinpointing both significant and relatively minor issues of a given property, the easier it will be to compare it to other investments and eventually settle on the one that is best aligned with your short- and long-term investment goals.
For fix-and-flip investors in particular, a thorough property inspection will enable you to accurately forecast a rehab budget to cover all needed home upgrades uncovered during the walk-through. If the initial walk-through of a potential fixer-upper uncovers excessive costly repairs, the investor can simply back out of the investment and move on to the next property without having to waste the time and energy of addressing these issues when it is too late post-purchase.
Note that the selling party will not always disclose all pertinent information regarding needed home improvements and real estate agents will only know so much about the building’s condition. Accordingly, successful real estate investors need to be diligent when analyzing projects.
Although it is an additional expense, investors should always have a professional home inspection done on every property they are seriously considering to augment their own personal walk-through. This additional layer of the due diligence process will give you peace of mind during the closing process and allow you to efficiently plan the next stages of the investment project.
Structural Issues to Check During a Walk-Through
Whether looking to buy for a rental property or a fix and flip, it’s vital you check the condition of the building before committing. Here are our top tips for structural things to look for when conducting your walk-round.
Let’s start with the foundation.
Renovations associated with the foundation and the basic structural integrity of the property are inherently costly and can take an extended amount of time—putting your investment property over budget and off schedule.
This type of repair can eat into your profit margin and make it difficult to resell the property if that is your end-goal. Any sort of movement of the foundation is a serious problem, so keep an eye out for the following during your walkthrough:
- Take the time to close the doors and observe if there are any substantial uneven gaps between the door and the top/bottom of the frame
- Look for windows that are out of square or misaligned
- Unlevelled floors could be a sign of potential foundation issues
- Note any visible cracks or damage to the exterior of the foundation
Another major problem area is the roof. It is common for real estate investors to conduct an entirely separate professional roof inspection as a faulty roof can present a significant safety hazard and can be very expensive to correct.
Be on the lookout for the following signs that could indicate problems with the roof:
- Damaged or separated shingles
- Water accrual or pooling on properties with flat roofs
- Decaying or rotting spots on the eaves of the roof
- Water damage or discoloration on interior ceilings
- Water damage or observable leaks in the attic
Major System Check
It is also important to check the functionality of the property’s major systems including the heating, cooling, water, plumbing and electrical systems.
When it comes to verifying the status of these integral home components, your best bet is to get a professional to check them out to determine if they will require replacement or upgrade in the near future.
Here are some questions you can ask and simple steps you can take to ensure there is nothing overlooked during the walk-through:
- When were these systems installed?
- Were there additions to the property? If so, were the major systems upgraded or modified to accommodate the added square footage?
- Look for water stains or leakage on the floor
- Examine electrical outlets and any visible wiring
Signs of Water Damage
Water damage can lead to costly repairs and significant structural issues if left untreated. Here are some common indicators that investors should look for during their inspection:
- Water stains on walls or ceilings: These can appear as discoloration or streaks and may indicate a leaky roof or plumbing issue.
- Musty odors: A moldy smell suggests moisture accumulation, often caused by water leaks or inadequate ventilation.
- Warped wood or flooring: Excessive moisture can cause wood to warp or flooring to buckle, signaling water damage.
- Mold growth: Mold thrives in damp, moist areas and can be found anywhere with water damage. Look for black or greenish patches.
By paying attention to these signs, real estate investors can uncover potential water damage issues before purchasing a property. If any of these indicators are present, it is crucial to address them promptly to avoid further damage and expenses.
Signs of Mold
When conducting a property walk-through, real estate investors should be vigilant in identifying signs of mold. Mold can have serious health implications for occupants and can also be costly to remediate. Here are some key signs of mold to look out for during a property walk through.
- An unpleasant damp and musty smell
- Visible patches of mold – these can be black, green, or brown, and may appear fuzzy or slimy.
It is important to thoroughly inspect potential problem areas where mold is commonly found. Basements, bathrooms, and areas with water damage, such as leaky pipes or roof leaks, are particularly susceptible. Mold thrives in moist environments, so areas with poor ventilation or high humidity levels can also be breeding grounds.
Garage Doors and Windows
Garage doors and windows play a significant role in the overall functionality and appeal of a property.
When examining the garage doors, it is crucial to look for any signs of damage or wear. Inspect the doors for
- broken panels
- warped frames
- malfunctioning openers
Pay close attention to the condition of the locks, hinges, and springs, as they are vital for security and ease of use.
As for the windows, observe if there are any:
- broken or missing panes
Make sure the windows open and close smoothly. Faulty windows can lead to energy inefficiency and water damage, so it is critical to address any issues before making a purchase.
Investors should also consider the aesthetic aspect. Are the garage doors and windows in line with the property’s overall curb appeal? Upgrading or repairing these features can enhance the property’s value and attractiveness to potential renters or buyers.
Cosmetic Issues to Check During a Walk-Through
When conducting a property walk-through as a real estate investor, it is essential to thoroughly inspect the property and assess any potential cosmetic issues.
While these issues may not necessarily affect the structural integrity of the property, they can still have an impact on both the rental appeal and the overall value of the investment.
By paying close attention to these cosmetic issues, investors can ensure that they are making informed decisions and avoid unexpected expenses down the line.
Interior Paint Condition
The condition of the paint can provide valuable insight into the level of maintenance and care the property has received over time. By assessing the interior paint, investors can gauge the overall condition of the property and anticipate any potential issues that may require attention.
During the walk-through, make sure to thoroughly inspect the walls, ceilings, trim, and doors for any signs of cracking, peeling, or discoloration. These may indicate underlying structural issues or cosmetic problems that need to be addressed. Cracking paint, in particular, can suggest water damage or shifting foundations, which can be costly to repair.
It is essential to thoroughly assess the condition of the flooring during your walk-through. Different types of flooring, such as carpet, hardwood, laminate, tile, and vinyl, should be carefully inspected for signs of damage or wear and tear.
- Carpet: Check for stains, tears, or excessive wear in high-traffic areas
- Hardwood floors: Examine for scratches, dents, or any signs of water damage
- Laminate flooring: Inspect for any warping, peeling, or chipping
- Tile floors: Look for cracks, loose tiles, or grout issues
- Vinyl flooring: check for tears, bubbles, or discoloration.
Assessing the condition of the flooring is crucial as it can determine the need for repairs or replacements, which can greatly impact your investment decision. Consider the cost and effort required to fix any flooring issues and how it may affect the overall value and appeal of the property.
Fixtures and Appliances
Thoroughly testing all fixtures and appliances is imperative to ensure they are in proper working order. This step is essential to avoid any surprises or additional expenses down the line.
During a walkthrough, investors should test key fixtures and appliances such as the oven, dishwasher, washer and dryer, and utility sink if applicable. To ensure functionality, there are specific things to look for when testing each item.
- Oven: Verify that all burners heat up properly, and the temperature control works accurately
- Dishwasher: Test that it cycles through all settings, properly cleans dishes, and drains water.
- Washers and dryers: Check that they fill with water, spin, and dry efficiently.
- Utility sinks: Confirm that the faucet works, and there are no leaks or damages.
By thoroughly testing these fixtures and appliances, real estate investors can assess their condition and functionality. Identifying any potential issues beforehand allows investors to make informed decisions and avoid costly repairs. Additionally, this step ensures that rental properties are ready for tenants, minimizing any inconvenience or complaints.
Ready to Expand Your Real Estate Portfolio?
Make sure you don’t miss out on the opportunity to earn passive income and diversify your asset portfolio.
The financial experts at Express Capital Financing specialize in developing creative and effective funding options for investors of all experience levels and incomes. Our streamlined application process and years of experience means that you will have access to the capital you need in a fraction of the time it takes traditional banks.