In today's market, those looking to purchase property as owner-occupants or novice investors tend to be wooed by pretty finishes. Some property owners looking to capitalize on a hot market spend their rehab budget on the cosmetic updates, ignoring more costly repairs in hopes that a potential buyer will be just as careless in his or her decision-making.
The industry refers to this practice as lipstick on a pig. However, the savvy investor pays attention to the bones of a property: the foundation, roof, HVAC, plumbing and electrical systems.
Smart Real Estate Investing Starts with Knowing What to Look For
If a property doesn't have a solid foundation, its owner doesn't have much of a leg to stand on, so to speak. A faulty foundation can be evident in concrete or pier-and-beam foundations, but to the unsuspecting, any needed foundation repairs would go unnoticed.
However, there are clues that eventually come to the surface, such as
-Wall or flooring cracks-
-Walls or baseboards that are soft to the touch
-Buckling or sloping floors
-Mildew odor in the property
-Doors that stick or open at random
-Landscaping that slopes toward foundation, not away
Fix the Foundation or Find Another Property
There are two schools of thought regarding smart real estate investing. If you have the liquid reserves to pay for fixing the foundation, move forward on the purchase if there is enough upside in the deal.
If you don't have the cash on hand, see if the seller can pay for the repair, and then increase the purchase price to compensate the seller for the repair. You won't have to cough up the out-of-pocket costs, and that money can be allocated to another property investment.
With any foundation repair, make sure that:
-The property is inspected by a structural engineer.
-The estimate and repair are done by a licensed, foundation professional.
-When possible, the repair comes with a guarantee and/or transferrable warranty.
If your home is going up for sale soon but you believe there may issues with the foundation, there are options for how to best move forward:
-Get a foundation repair/replacement estimate from a professional.
- Get the property valued in two ways by a licensed appraiser:
- Valued for as-is condition
-Valued for foundation repair/replacement included
With both appraisal reports, you can make a more educated decision on how to market your property based on costs of repair versus value adjustment without the repair.
Basement Homes: A Bad Rap or Worth the Extra Square Footage?
Depending on the geo-target of interest, many homebuyers seek out properties that have a basement. For homes in the U.S. Southwest, a basement provides a cooler abode during the summer months as temperatures edge up toward 120 degrees. People who reside or own property investments in the Midwest or Southeast also look to basements as a safe space during inclement weather conditions, such as tornadoes or hurricanes.
The Benefits of Basement Homes
When looking for property, smart real estate investing practices include finding opportunities that offer square footage benefits. Basements provide flexibility in usable square footage that can add value to the property.
Basements make for great:
-Extra storage areas
-Additional sources of rental income (separate guest quarters)
- Office space
-Multi-generational housing
-Recreation rooms
Code Compliance Is Key
In order to fully enjoy the benefits of a basement, homeowners must also make sure to understand the added responsibilities that come with this type of square footage. There are safety and health risks due to its underground elevation. Using licensed contractors for necessary repairs and property maintenance are recommended to keep up-to-date with building and safety code regulations.
Knowing What You Buy Maximizes How You Buy
First-time buyers and investors can be full of enthusiasm and low on know-how, which is all the more reason to get the sound expertise of licensed contractors, such as foundation repair experts, to keep smart real estate investing on track. Need Advice on Your Foundation? Ask the Experts, since 1933 - OlshanTM