How to inspect a fixer upper home and determine if it's a good investment.
So you think that you've found the diamond in the rough...a fixer upper. But is it really a good investment? There are many aspects to take into consideration when buying a fixer upper, this article will aid you in inspecting the property for major and costly problem areas that could eat into your profits and potential destroy an otherwise good looking deal.
* STEP 1: The most expensive aspects of fixing a home include 1) roof replacement 2) foundation replacement 3) plumbing 4) electrical and 5) air conditioning. When examining a house look at the roof. How many layers of shingles does the roof have? You can usually layer a roof 3 times before it needs to be completely replaced. Replacing a roof will cost about $3,000-$6,000 for a 1,000 sq ft home. I recommend focusing on value added improvements which will add at least $2 of value for every $1 you invest, unfortunately, a new roof does not meet that criteria, so make sure the roof is in good condition when inspecting a prospect home investment.
Note: Some insurance companies will want the roof to have a certain amount of life left on it, usually 5 years of life in order to insure your home.
* STEP 2: To best inspect the roof go into the attic of the home. Look at the ceiling joists for any water damage, which can be spotted by moisture, mold, and water damage rings. This is where your flashlight comes in handy.
* STEP 3: Now that you have inspected the roof, circle the perimeter of the house for cracks in the foundation. Over time a damaged foundation can cause a house to shift and settle. Foundations are extremely expensive to replace and add little or no value to the price of a home. If the house has a basement, you will want to inspect the basement for cracks in the walls which can be an indication of a damaged foundation. Also, check the interior floor of the home for slants or cracks in the concrete. Running your foot over carpeting can often identify large foundation cracks and settling issues. Because slants in the home can be fixed easier and with less expense than replacing a foundation, it is more important to inspect the foundation for cracks rather than worrying about a slight slant in the home. Replacing a foundation on a 1,000 sq foot home can run up to $20,000
* STEP 4: Next, turn on all the faucets in the house...and I mean all the faucets. What you are testing for here is water pressure. In a house with plumbing pressure issues turning a shower on in one bathroom can compromise the water pressure in another area. This point is especially important if you are considering investing in a multi family home...the last thing you want is one tenant complaining about the low water pressure in their shower whenever another tenant turns on the washing machine in their unit. Ideally, you want to look for copper plumbing. Most fixer upper homes will have galvanized plumbing which is ok so long as the water pressure is good throughout the house. Galvanized plumbing tends to corrode easily thereby reducing water pressure. Having new plumbing placed through a house can run around 4K and adds little cosmetic value to a home.
* STEP 5: Next, you will want to inspect your electrical situation. Take your screw driver and unscrew the electrical panel. You are looking for rust and fried wires. Rust could indicate that water has gotten into the panel, which is bad news. You also want to look at the size of your panel box. Does it have room for additional breakers (those black switch things on the panel)? Often, older homes have small electric panels. Back then, people did not have all the nifty gadgets we have so huge boxes were not needed. However, today people have many electrical appliances which require a good electrical panel in order to avoid outages. Having a new 200amp electrical panel installed will run about $2000.
The next step in learning how to buy a fixer upper is look at the light fixtures on a pull chain? If so, the home uses knob and tube wiring. Its ok to have this type of wiring, but its outdated and not the safest. Take a look at your electrical sockets; are 3 prong outlets readily available throughout the house? Most older homes, have only 2 prong outlets which may need to be updated to 3 prong to accommodate modern day appliances. Rewiring a home with a new panel, wires and outlets can cost $5-8k for a 1000 sq foot home. these are things you want to look for when you want to know how to buy a fixer upper.

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