FEATURE
Home Inspection Makes Business Sense for Any Buyer
What the Property Investor Needs to Know
JOHN GRAHAM
John Graham has a background in development , home building and estate agency . He entered the home inspection business 10 years ago and founded an inspection company , HouseCheck and also an inspector training business - SAHITA . He is a director of NABISA - the National Association of Building Inspectors of SA , and a member of the team of experts tasked with developing a national building inspector qualification .
WHAT THE INSPEC- TOR LOOKS FOR
There are some basic elements the property inspector will pay attention to :
• Roof covering , flashing , and structure ;
• Drainage and waterproofing ;
• Plumbing and the geyser ;
• Electrical installations .
E
motion is very often the main motivation for buying a family home . On show day , buyers fall in love with the kitchen , the garden , or the proximity of the home to schools and shops and make a buying decision based partly on emotion and partly on the maximum bond a bank will grant .
Often buyers forget to check the condition of the roof and the hard-tosee areas of the house . Buying with the heart rather than the head is not a good business strategy . Property investors are a less emotional breed who make sensible decisions based on an evaluation of the potential profitability of the purchase .
Property investors fall into three categories :
• Buy to flip : Some property investors make their money by buying older houses in good neighbourhoods – then renovating and “ flipping ” the house .
• Buy to rent : usually leveraged with the rent receiving being used to pay off the bond
• Developers of new homes Flipping is a good business strategy if you can buy cheap , renovate quickly and then sell at a profit – after allowing for transfer costs and agents ’ commission .
Buying a flipped house can also benefit the buyer of a home for the family - who can often get an upgraded and modernized home in a well-established older area . Such homes are usually spacious by modern standards with bigger rooms and large , well-established gardens .
The strategy for the “ flipper ” is to buy a run-down home at a low price , allow- ing enough margin to pay for renovation and other costs , and then quickly put the home back on the market at a competitive selling price .
Know what you ’ re getting
A professional home inspection will assist both the “ flipper ” and the buy-torent investor . Impartial inspections help the investor to understand the true condition of the properly and what it will cost to fix . Investors who are buying to rent should find an inspector who is able to prepare a 10-year maintenance and repair budget .
Buyers of renovated homes need to be cautious because the quality of the renovations can vary greatly . There are dodgy flippers who use cheap unqualified builders and inferior materials and design .
It ’ s always a good idea to always make your offer to buy any existing property contingent on a satisfactory inspection .
The inspector should use a moisture meter and a trained eye to look beyond the fresh coat of paint . Are the corners square ? Are the floors even ? Is the workmanship up to standard ?
If walls have been removed then the inspector will check out the plans and identify the load bearing walls . Safety aspects regarding balustrades and decks will also be inspected . Buyers should ask for approved plans and check that the “ as-built ” structures conform with the drawings .
Home inspectors also have a snagging role to play in new developments . In fact , some developers offer an independent snag report to demonstrate their confidence in the quality of their building .
18 DECEMBER 2017 / JANUARY 2018 SA Real Estate Investor Magazine