Every time I watch an HGTV show, they seem to have a huge surprise that they didn’t expect once they get into the demolition phase of the project. As pros, we often spot these when they are looking for the house and, many times, we even see it when they are touring the house for the first time. Most of these situations are made for TV to pump up the drama, but there are occasions when you crack open a wall and you find something that you don’t really expect. This is why properly inspecting a property before you buy is critical to avoiding costly surprises that can out you out of business.
As a real estate investor, you have to move quickly to survive in this competitive environment. Most real estate seasoned real estate investors realize that putting an inspection contingency into a contract in a competitive bidding situation will doom an offer from the start. Those savvy investors do their due diligence while they tour the property for the first time…before they make the offer. They usually either take their contractor with them or, in a lot of cases, they are a contractor themselves. They’ve done scores of renovations and they know where to look when looking at a property.
If you don’t have a contracting background or you aren’t at a point where you have the pull to get a contractor to go with you to check out deals, you can still put inspection periods into a contract. You might find yourself behind other buyers that have not included such contingencies and, therefore, win the day. The worst thing you can do, however, is to buy a property without inspecting it. We see that mistake all the time and those mistakes can be quite costly.
Are there deals where you inspect the property and you still get a surprise? You bet. It happens all the time, but performing some sort of inspection to understand what you will be running into and planning for it accordingly will mean the difference between success and failure for your real estate investment business.