The Rental Portfolio Owners’ Guide to Spending on Inspections
Nobody likes to spend more money than they have to. Even a small increase in costs can amount to huge expenses once you multiply them to the scale of a large rental portfolio.
A professional home inspection, though, is key to understanding the profitability of your rental and cannot be done in house. You need the correct tools, software and experience to fully document a home’s condition–Which is why it is essential to hire a professional.
Below, you’ll learn more about what a home inspection is and the home inspection process, including their services and cost. You’ll also discover there are emerging alternatives to traditional home inspection services that could be a better option for rental portfolio owners.
What Is a Home Inspection?
Before you officially close on a property, an inspection provides an overview of a home’s condition. This includes a written report outlining possible issues including health and safety problems.
According to HomeLight, the cost of a home inspection “covers the visual evaluation of the house and the home inspector’s written report.” After the appointment, you could wait up to a week to receive the final document. Inside the report, you’ll find a broad, objective view of the real estate and its history.
No property is perfect. The inspector may find several minor issues to address, and sometimes even major problems that need emergency repairs. When you’re looking at a property for an investment purpose, the key is to make sure the house is still profitable after accounting for any needed renovations or repairs.
What Is Included in a Home Inspection Report?
What will and will not be covered in a home inspection depends on where you’re investing. Find more information on the national standards of the American Institute of Inspectors here.
In general, though, here are some key parts of an inspection:
- Condition of roof, including shingles and gutters
- Issues with the exterior
- Electrical (the age and condition of wires, outlets, fire alarms, etc.)
- Plumbing (bathroom appliances and any existent leaks)
- Septic tank leaks, or any other signs of sewage issues
- HVAC (heating, ventilation, and air conditioning)
- Signs of foundation problems
What Is Property Insights™?
Property Insights™ is a comprehensive package built for rental investors during the due diligence process. The package provides the single-family-rental (SFR) industry detailed property data for key acquisition, renovation and leasing decisions across their entire portfolio.
Services include a Property Condition Report, Property Detail Report, and 3D Inspection Tour bundled for a holistic view of the property to help you make smart acquisition decisions.
Customizable Property Condition Report
This is an inspection of the property with reference photos to assess its current state. Customize the items on your checklist, so you can more easily evaluate the level of repairs or renovations needed to meet your portfolio standards. You can also use this report to track appliances and utilities through the property’s lifecycle. Confirm the details on the report with the included photos.
Property Detail Report Including a Detailed Floor Plan
This report includes room dimensions like wall and floor measurements and a detailed floor plan. Use these measurements to scope repairs or renovations prior to acquisition or during a turn. These numbers help to scope repairs or renovations and estimate material costs like paint, flooring, countertops and cabinetry. This information helps you reduce change orders with contractors and verifies the accuracy of material orders.
3D Inspection Tour
See a virtual walk-through of the property to understand its layout and condition. This helps you view the layout and condition of both the exterior and the interior of the property virtually. With the 3D Inspection Tour, you can identify key issues from a holistic view. The walkthrough compliments our data reports by offering a visual perspective.
What Is Included in Property Insights™?
Use the Property Insights™ suite of services to make informed acquisition, renovation and leasing decisions with Property Insights™. We’ve highlighted some of the best features of the Property Insights™ package.
Properties don’t exist in a bubble. Your property’s location will play a big role in its acquisition price and rental rates. Get details about where the property is located in relation to other properties, vacant lots, etc…
Does the property match the condition of others in the area? Are there board-ups or vacant lots nearby? Is the property on a busy street? These are all important questions to ask when considering acquisition.
The Property Detail Report gives you the measurements you need in order to scope renovations or repairs. The measurements include exact measurements of every door and window, ceiling height, total square footage, and a detailed floor plan of both interior rooms and the outdoor perimeter.
This way you can accurately estimate material costs like paint, flooring, countertops and cabinetry. Also, the Property Detail Report helps reduce change orders with contractors with verification of material orders and bids from third-party vendors.
The exterior of the property is arguably as important as the interior. Know what the exterior conditions of the property are with the Property Condition Report. Does the driveway/walkway need repairs? What about the fences/gates? What is the condition of the porch/patio/deck?
The landscaping is important to document too. Is there any vegetation causing damage, or near-damage to the home? Are there any tree ricks or issues, such as a tree ready to fall?
Windows, Doors, and Roofing
Understanding the type, surface area, and condition of each of these barriers can help prevent drafts or energy leaks. Also learn the number of doors and windows in the property, all of which are valuable for ordering replacement materials and estimating the value of the property.
There’s no need to send another contractor to measure the kitchen counter space or the size of cabinets. Property Insights™ provides exact measurements for both. This way, you can order the exact amount of cabinet or countertop materials without waiting on another vendor to visit the property.
Appliance Inventory with Barcodes
Appliances like refrigerators and laundry sets, along with HVAC, are essential and can be costly if repairs are needed. Get a full inventory of what comes with the property, the condition, along with barcodes for each appliance.
Avoid costly repairs down the line by knowing the full condition of sinks, toilets, and baths.
How Much Does a Home Inspection Cost?
It Depends on what you’re looking for. The average home inspection costs $300. This price, though, can fluctuate depending on your location. Please reach out for pricing on Property Insights™.
Every property’s real estate needs are different. You’ll want to consider the pros and cons of a home inspection and Property Insights™ to decide which one is the right fit during your acquisition due diligence.
Property Insights™ is a better option for large scale rental investors who need quality data on a home, quickly. With Property Insights™ you will receive the full reports within 48 hours. Because Property Insights™ is available nationwide, real estate investors active in several counties or states can expect the same, hassle-free experience every time.
There are a few more services you can also add to your due diligence process. Far from afterthoughts, these could reveal crucial information.
For example, you should consider thorough inspections for radon, mold, lead, and other hazardous substances. Even when local laws do not mandate it, these tests put your health and the health of your residents first.
There may also be hazards specific to your region that need their own inspection. For example, in California, you’ll want to check the condition of the property’s earthquake straps.
Beyond health and safety, 3D tours are another great way for real estate investors to get a holistic view of a property without ever visiting the home. 3D tours allow you to take a look at properties’ layouts and conditions to scale from the convenience of your computer.
PlanOmatic’s Property Insights™ Package
We’re proud to offer resources that will help you make informed decisions for your portfolio. Our Property Insights™ package includes a thorough inspection of the rental, with pictures documenting its current state. Meanwhile, the property detail report provides a floor plan and dimensions for every room. Add a 3D Inspection Tour to get the full picture of your prospective investment.
At PlanOmatic, we understand that real estate investors need fast and accurate information on each property. We also know how important it is for you to have tools that help you make key due diligence decisions whenever and wherever you want. Download a sample of our Property Insights™ reports today.