WHAT TO LOOK FOR WHEN TOURING AN INVESTMENT PROPERTY

So, you’ve taken the time to create a short list of properties that seem like good candidates for your real estate investment portfolio, and it’s time to tour them.  

In this post, I’m going to cover 10 not-so-obvious, but important, things to pay attention to during the tour.  Let’s get started.

#1 Trees

Trees?  What’s the deal with trees?  Well – maybe nothing.  In fact, trees can add some charm and shade to a property, however, if trees are big enough and close enough to fall on the property or a neighboring property and crush it, or if they are growing up and around power lines, then they are a threat and a liability.  

Getting trees trimmed or removed by a professional can quickly creep into the thousands, so look out for trees and consider the potential costs.

#2 Foundation

If a property needs foundation work, I’d just walk away from it, in my opinion.  Jagged cracking in walls, cracks in the actual foundation, doors and windows that get stuck, cracking above window frames and stair-stepping cracks in brick, are all signs that there are potentially some foundation issues.  

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Now, it could be that the seller has done some foundation repair but hasn’t bothered to repair these cosmetic issues.  You’ll want to have your Realtor investigate this.  

#3 Sewer Line

Sewer line issues can initially be like a disease with no symptoms.  You buy a property, plumbing seems to be working fine, and then six months later your plumbing is backing up. Yes, this has happened to me more than once.  

Replacing a sewer line is easily a couple thousand dollars.  The best thing to do, especially if you’re considering an older home, is hire a plumber to run a camera down the sewer line and let you know if its in good shape or not.

#4 Fireplace

Ah, yes.  Those good old wood-burning fireplaces.  Electric fireplaces don’t even compare. However, just because a home has a wood-burning fireplace doesn’t mean it’s operational.

Especially if the property hasn’t been well taken care of, or if the property has been sitting on the market for a while, it’s likely, at the very least, the fireplace needs to be cleaned.  Typically, I’ve found fireplace cleaning/repair work to fall between $500-$1500 depending on what needs to be done.  

Just Google “chimney repair” or “chimney sweep”, and you’ll find companies in your area.

#5 Electrical

Just because the lights turn on doesn’t mean the electrical is in good shape.  A big electrical item to explore is whether the property has knob and tube wiring or not.  

Knob and tube wiring is common in homes built in the late 1800’s or early 1900’s.  Knob and tube is dangerous, and insurance companies will likely not insure a property with knob and tube. Here’s a great write up I found online about knob and tube.  

The main point here is that if the property has knob and tube, you’re likely looking at a total rewire which will be costly.  If you notice knob and tube in the property, you’ll certainly want to get an estimate from an electrician.  

#6 Flood Plains

Be sure to have your Realtor check if a property of interest is in a floodplain.  You can also likely do this by visiting the tax assessor’s website of the county where the property is located.  www.freeflood.net is a great free service as well.  

There are three issues I’ve encountered with properties in flood plains.  

First, if you wish to finance the property, it may be difficult to find banks that will finance a property in a floodplain.  

Furthermore, you will likely be required you to carry flood insurance which is an added cost.

Finally, in some cases, FEMA may not even let you renovate your property, or may impose certain requirements like elevating the property prior to renovation.  

#7 Duct Work

Even if the seller has installed a newer furnace and AC unit, it’s still a good idea to check the out the age and condition of the duct work.  

Old duct work can cause high utility bills and poor air quality.  There are two types of duct work: rigid and flexible duct work.  Here’s a great video I found that explains the difference:

#8 Mold

Mold can be really bad news, but I’m not a mold expert, so I’ve decided to just provide you with a good video (below) I found that helps explain how to identify mold.  

What I will say is, even if the presence of mold is not obvious, it could be that 1) the seller or previous owner has made an ineffective attempt to remove mold, and it will likely return, or there has been an effort to just paint over the mold.  If the latter, here are a few signs to look for:

  • white paint that has turned yellow
  • ceilings or walls that don’t appear flat (bubble or bow)

#9 Water Leaks

Leaks come in many different shapes and sizes.  Even small leaks, if unattended can lead to major problems.  

Leaks can be from water coming in from the outside such as through the roof, or a leak can be caused by a plumbing issue.  Water stains on the ceiling are a sign that the property may have had a roof leak.  

Additionally, if moss or mold is growing on an exterior wall, this is also a sign of a potential roof leak.  Again, known leaks should be referenced in the Seller’s Disclosure Statement that your Realtor will have access to.  

The best way to check for plumbing leaks is to check the water meter.  Follow these steps:

  1. Turn off all water in property
  2. Locate water meter, and find the leak indicator (either a triangular dial or silver wheel).  If it’s moving, you likely have a leak.
  3. Find main shut off valve in property, and turn off water
  4. Return to water meter.  If leak indicator stops moving, the leak is inside the house.  If it is still moving, the leak is between the meter and house somewhere.  

If there is a leak, it’s advised to get a plumber involved to identify the problem before considering placing an offer.  

It’s also recommended to look at the flooring around areas where there’s plumbing (sinks, toilets, showers, etc.).  Check out the floor.  Is it damp, soft, or bubbling up?  These are signs of water damage and potentially mold which opens up other issues.

#10 Death

Yes, death.  Many states do not require sellers to disclose whether or not someone has died in the property.  

If there has been a death, will that lower the property’s value?  Possibly, but, regardless wouldn’t you just want to know?  Here’s a site that can help: www.diedinhouse.com.  

I found a great deal on a house some months back, bought it, and found out later the previous owner’s son blew his head off in a back bedroom.  The property was a good purchase, but I still would have appreciated knowing about the suicide up front.

Once you’ve found a property you like, it’s time to submit an offer for your investment property.

About the author

Brandon Jones

Desiring to escape the clutches of corporate America, I started investing in real estate in 2015 and left my job in 2020 to become a full-time real estate investor. I now teach other how they can experience freedom through real estate investing.

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