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5 Issues Distressed Properties Hide (& How to Detect Them)

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Pain is often the place where real estate transactions are seen. Bad properties that require serious rehabilitation and repair have the ability to add value and are therefore what I usually buy. Properties in need range from small single-family homes to apartments. I bought them all, repaired them and brought them back to life.

In most cases, bad properties are purchased “as is”. This means that the seller does not guarantee anything related to the condition of the property. In other words, the buyer should be careful! As a buyer, you need to be familiar with what you are in, as many of these properties can be in pretty bad shape. The roof may be leaking. You may not have a kitchen. The condenser may have been stolen and the paint may have come off from all possible surfaces. In addition, you will probably have to make a quick decision, as another investor is right behind you, so there is no long inspection time.

All of these issues may sound bad, but for me they are all really good. why? Because you can see these problems. You can see that the roof needs to be replaced. You can see that the condenser has been stolen. You can see that all the walls need to be scraped, primed and painted. You can budget for it at the purchase price.That’s me Can’t see It has to do with me and has cost me a lot in the past.

Related: 8 Expert Tips for Rehabilitating Purchases and Holds for Maximum Rentability

What you can’t see is often invisible until you buy the property and start rehab. Removing old drywall, ripping tiles, or simply turning on the utility reveals these hidden issues.

Here are five examples I’ve encountered over the years, and some that I can look for and run to find problems that may be hidden and invisible.

Five big issues hiding distressed properties (& how to detect them)

1. Termites and termites

These bugs can actually do some damage if left unattended for long enough. On the contrary, they can even disappear for a long time, but leave enough damage to cause serious concern. Sometimes the damage caused by the bug is obvious, but sometimes the bug is hidden and unknown until the contractor tries to drive the nail in and turns the stud into dust. I recently purchased a fairly serious termite-damaged house that wasn’t seen until the old drywall was removed. There was nothing left to screw in the new drywall. It cost me $ 2,000 to fix it.

My situation above was completely hidden, but there are some clues you can look for. Rotten trees are obvious. Other clues include thin mud tubes running up the wall, small piles of sawdust in strange places, and small holes in trees and walls. Please take a closer look as it may be small. If you feel that something may be hidden, try driving the driver into the wall. Does it pass correctly? If you see it, or if you see any of the above, take special care to continue.

2. Flood damage

Water can be really mean. It can drip behind walls or under the house for years before damage appears. I bought a property with rotten beams under the tub and few supporting the cupboard. There really wasn’t a way to know these things until we tore them to replace them. However, water damage is fairly obvious if you look for the right place and know what to look for.

Here are some tips.

  1. Bounce lightly on the floor near the toilet, tub, and all sinks. If you have a give, investigate further.
  2. Look under the house if you can. Take a powerful flashlight. Are there any standing puddles or discolored joists? Ask why and investigate further.
  3. Look for mold. Mold needs moisture. If you see mold again, ask why and investigate.

3. Collapse of sewer

Sewerage does not last forever. Things that have been washed away in the roots of trees and toilets will eventually invade. The problem is that it’s underground and invisible. In addition, in many cases the utility is not turned on and cannot be tested. Sure, you can hire a plumber to run the camera there, but it can be time consuming and expensive.

However, there are clues that can upset you. First, look for obvious signs of excavation in the garden where there may be sewers. Why was this area dug? Then look for green grass in the brown garden. Why is the grass green there? Third, look for small dents or holes in your yard, as broken sewers often create sinkholes. Finally, when I meet my neighbor, I would like to ask if I know anything. Just starting a conversation often causes their tongue to start shaking (it works well for other problems).

4. Leaky piping

As mentioned above, water is really sneaky and leaks can be difficult to detect. They may be behind a wall, under a house, or in the basement. If the utilities are turned off, there is really no way to determine how much the plumbing system is leaking until you turn them on after purchasing the properties (try them for testing before buying the properties). You can turn it on, but that’s true pain here).

If you have the utility turned on, find the water meter and check for leaks. Look at it. Is the meter spinning or stationary? If it is spinning, water is flowing somewhere. Make sure everything is turned off and try again. Is it still spinning? There is a leak. If you can’t find it in your house, it may be in the basement. Look for puddles or running water in your yard as the waterline may be corroded.

Hire a contractor

Related: How to avoid over-improving your traits: three major levels of rehab end

5. Electricity and natural gas problems

These may not be as common as leaky pipes, but they can be very dangerous and therefore much more dangerous. Since the utility is turned off so often, it is impossible to smell the leaking gas or know which breaker is activated to dissipate the sparks. Still, most of these issues are relatively minor and easy fixes, but can be costly, especially if the plumber needs to search and find the gas leak.

These hidden items have the ability to squeeze your rehab budget and take you off schedule, but you can prepare for them. Whenever I estimate repair costs and rehab timeframes, I would like to make an extra budget for these hidden issues. Something in this list will always pop up.

How much is the budget? I would like to add about 10% of the total rehabilitation budget to the “Oops” element. So if you think it will cost you $ 20,000 to rehabilitate your property, add $ 2,000 to your hidden item budget. You may not need all of them, but you can rest assured that they are there. If the property is in very bad condition, you could increase this number by up to 20% to cover your butt.

[Editor’s Note: We are republishing this article to help out our rehabbers who have found BiggerPockets more recently.]

What are the hidden problems you found in rehab? How much “oops” do you budget?

Share with your comments.

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