House Inspections For Landlords-To-Be!
It’s exciting times ahead when you have house inspections booked and a potential investment property purchase on the horizon. But try not to get carried away because buying your own home versus buying a property to let to tenants is a completely different ball game.
There’s an aspect of psychology when it comes to purchasing an investment property. You want to imagine yourself living there, but the reality is, the tenants who will be living there may be nothing like you which is why you have to think outside the square.
What to consider during investment property inspections
1. Head before heart
You’re poised to become a property investor and yes, it’s a time of great excitement! But buying an investment property is different to buying a home that you will live in yourself. Forget being inspired by the home renovation shows and design, and think like a tenant. What are the practicalities they need in a home? You may fall in love with the wallpaper or the laundry cleverly tucked away behind a couple of sliding doors, but are these the kind of features which will make the property a covetable rental?
2. Will it appeal to the rental market?
As much as you may love some aspects of a property, it’s essential that you understand the rental market demographic before you start house inspections. If you are looking at property in a family-focused suburb, it may not be ideal to inspect two-bedroom apartments. Alternatively, you may wish to reconsider inspecting large family homes if the suburb demographic mostly attracts young, single professionals. Further, a large two-story house with plenty of stairs may not suit older retirees. Research and better understand the area by having a walk around, visiting shopping precincts and speaking to local real estate agents and property managers.
3. Luxury or livability
If ornate stained glass windows catch your attention or an outdoor pool and spa have you imagining a cocktail in hand during summer, think about who will be renting the property. Will it be a family with kids likely to break said stained glass with the kick of a ball or uni students who wouldn’t know how to look after a pool and contaminate it with broken glass during a drunk party? Livability for the market demographic should always come first.
4. Are there hidden defects?
Don’t be fooled, there are some unscrupulous and tight-fisted landlords around who refuse to pay for any proper maintenance and end up doing it themselves. From dodgy plumbing and electricals, to plaster and paintwork to cover up cracks and water damage, there are many faults that are not immediately obvious to the untrained eye. That’s why a pre-purchase inspection to identify hidden defects is a must when purchasing an investment property.
5. Has the property been cared for?
If, during house inspections, it’s obvious that properties haven’t been cared for, reflected by defects that haven’t been repaired, poorly worn carpet, old appliances, damaged cabinetry etc., it’s likely there has been little budget for upkeep (or none at all). Who knows what less obvious (and potentially much more serious) problems have also been ignored over the life of the property? It’s just another reason why a pre-purchase inspection is essential. Not only will a detailed inspection uncover defects, but it will also help you determine the costs involved to carry out repairs and possibly use them as a way to negotiate the price of the property. Remember, buying an investment property means inspections such as building and pest are tax deductible.
6. Will tenants like living there?
Just because you inspect the investment property and find all is well doesn’t mean that will be the case later in the day. Try to inspect the property at different times of the day so that you can consider things like traffic noise, sun, neighbours and barking dogs. Also, consider the area demographics and if they’ll need things like public transport, extra parking and a particular home layout.
7. New doesn’t mean defect-free
Don’t be caught out by brand new properties – they can often hide defects as much as, if not more, than older properties. Whether you’re looking at apartments in a new complex, new townhouses or a group of new houses, take the time to door knock previous projects completed by the builder so you can find out if people are happy are not. You will quickly find out if you need to place a red flag on these properties or not. Common complaints include water penetration, poor tiling, internal water leaks, cracks and defective plumbing.
8. Don’t rush
Making the leap into property investment is an exciting time so it’s easy to want to rush through the process of buying an investment property when you think you’ve found the right one. But the problem is that rushing can mean making an impulsive purchase that isn’t ideal. Rushing into a purchase without careful consideration and the back-up of expert opinion increases the risk of missing many crucial problems with the property. It makes sense utilise professional expertise in order to avoid buyer remorse and prevent losing money on your investment due to things like repairs or tenant suitability. Making a small investment in a pre-purchase inspection can protect the much larger investment of your new property.
The key to getting the most out of house inspections on your journey to purchasing an investment property is being aware of potential problems and unforeseen costs. Forget the homeowner mentality and put yourself in your prospective tenant’s shoes. Research the market and understand how the demographic fits the property. Forget about pretty and think about practicality. And most importantly, never forget the hidden defects that are likely to lurk. Part of investing in a property is investing your time in making the best and most smart decisions. Good luck!
