Buying Rental Property? Make Sure You Evaluate These Structural Items!

Evaluating a rental property is much more than just making sure it cashflows or is a good investment financially.  There are several items that you should do your best to evaluate before you make an offer.  This may be difficult if you are evaluating from out of state but if you have a good realtor or contractor on your team in that location, they can certainly lend a hand and make sure the following structural items are evaluated prior to buying a rental property.

We want to put it out there right up front that we are not contractors and we are sharing the information that we have learned while purchasing our properties.  If possible, please get a licensed contractor or experienced investment realtor (flipping, renovations, etc.) to walk the property if you cannot.   Do not rely on Google.  The photos you see may be several years old and the property could be in worse shape than it appears.

Yet, another reminder of making sure you have a good team in place regardless of where you invest.  It starts with “boots on the ground” to lend a hand for inspections.  For information on how to create a good investment team, check out our blog Landlording, A Team Sport

The following information is a guideline so WHEN you have the conversation with your contractor or realtor you can impress them with a little knowledge 😉 Let’s jump into the list:

Exterior

Roof

Oftentimes you’ll see in the description of the property online “new roof.”  Like you, I would be excited to have a large expense already taken care of!  One thing to be mindful of is how many layers of roofs does it have?

When we purchased our single family home rental we noticed it was in need of a new roof.  What the bummer ended up being is that it had a total of three roofs on the home.  It is common to layer a new roof over an old one but this can create issues where the roofline meets the gutters plus they don’t tend to last as long.  If there were prior leaks, the sheeting likely was not pulled off and could be dry rotted if the roof leaked for awhile.  Sometimes adding a roof over the old one is just adding a band aid.  Not fixing the problems can lead to way more problems down the road as well as expense.

Lastly, the cost to remove them all was much more than if there was just one roof, plus dumping and garbage rates are crazy expensive to dispose of all the materials.

Materials Used

When looking at the roof, look at what type of  materials were used.  Try to avoid wood shingles if the property is located near a wildfire zone.  According to the pro’s, asphalt shingles are the most common and best material when considering life and expense.

Of course, roofing materials change depending on the climate so make sure you have a good understanding of cost if you’re evaluating a roof in a different area of the country than you are used to living and operating your rental property business.  Roofs in California are much different than those in Florida.  Completely different climates, extreme rain and wind with humidity in Florida, while California has more mild weather climate but high wildfire danger.

Gutters and Downspouts

Clearly you can see if the gutters appear to be rusted or have missing downspouts.  It may not seem like a big deal, but if rain water is not directed away from the foundation, it can find its way into the crawl space or basement and create a mold issue.

Foundation

For properties with a crawl space or a basement, it’s really important that you are checking the foundation and around it.  Look at the foundation and see if you can find any cracks.  Small cracks are ok and usually easy to fix.  Large cracks with gaps may require structural repair and that adds up fast.

Many properties don’t have a foundation and are located on a concrete slab.   Cracks in the slab would only be seen inside, and only if the flooring was removed so good luck with that.

Sloping near foundation

Ok, this is where being on site really comes in handy.  One issue we recently found on a property was that the land that lead up to the foundation was sloping downward, into the foundation.  This is also known as a negative slope.  Unfortunately, this is a way for rain water to seep into the basement or crawl space and create mold.  Sure enough, when the crawl space was inspected, there was mold present.  Can it be remedied? Absolutely, but for a price.  Look for property with land that slopes away from the house, not into it.

This is a reminder to look around.  It’s important to not just evaluate structural items at your rental properties, look at the whole exterior, including the driveway, fencing, and even the landscaping needs to be scrutinized.

Chimney’s

Many single family homes have chimney’s and they are definitely something to consider.  Our single family rental had one, but the previous owner had covered the interior of it up.  Oddly though, they left the chimney stack going out the roof.  We found, when we had to tear the 3 roofs off, that the 100 year old bricks were crumbling and it had to be removed.  Having a fireplace in a rental is nice, but more hazardous given this is college rental.  So, we opted to not replace it.

Look for cracks or broken bricks in the chimney.  Those openings could extend into the interior of the fireplace and be a fire hazard when a good blaze gets going.  Heat and embers can get in those cracks and cause a fire.  Repairs to fireplaces can be costly and likely why the previous owners of our rental opted to cover it up.

Landscaping

Check around the perimeter of the property for large trees where roots might extend under the foundation.  If you catch tree roots early, you can remove the tree without having foundation work to repair and secure.

In areas where there is a lot of rain, its good to have gravel or cement around the perimeter of the home (as long as it slopes away from it).  This is one of the most cost-effective methods of preventing overgrown weeds and shrubs, and possibly soil mounds, from compromising the building.

Water and Gas Meters

When buying a multi-unit property, see how many water and gas meters there are.  If it says it is a 4-plex, but you see 5 gas meters, there may be an area where you can add an additional unit.  Also evaluate where are they located on the property and do they have updated piping going into the building?

One water meter versus one for each unit means as a property owner, you are responsible for the water bill.  You can certainly use a service that uses metrics and divides the bill amongst the tenants, but in some areas there are stiff regulations to follow and it may not be worth it.  Water bills add up fast so make sure you are accounting for the expense in your analysis.

Air Conditioners

OK, maybe this is not evaluating a structural item of the rental property, but we have seen some doozies when doing our inspections!  Window units being braced and held up by a 2×4, newer units that have vibrated themselves nearly off their cement pad, roof units that are rusted and leaking, the list goes on.

Where AC units are now becoming a legal requirement in some states (we see you Oregon), they are absolutely a necessity in many areas where the summer heat and humidity can be unbearable.  Does this mean that previous owners took care of the units and had them serviced each Spring?  Nope.  Look for debris in the top of the unit, rust, or corroded fittings if you have access to it.

Decks, Stairs, Railings

DIYers have the best intentions but building decks and stairs really need to be left to the professionals.  There are codes for a reason.  It is important to know if the stair tread is the correct depth, the rise (height of stair) is not too tall or too short, and the railings need to be at a specific angle and height as well.  Posts need to be bracketed and secured in cement to deter dry rot at the bottom and a certain number of supports to avoid deck boards from sagging.

Buying a rental property that has these structural issues can be a liability lawsuit waiting to happen.  Railings that are not secure and then leaned on, can give way and someone could fall.  Uneven stair tread can cause someone to trip going down.  Dry rotted posted and supports can cause the deck to collapse if too many people stand on it.

California has enacted a law (SB-721) known as the deck and balcony law for these exact reasons.  Check out our blog we wrote on it: How The Deck and Balcony Law Affects Your Rental Property

Interior

Evaluating the structural integrity of a rental property before you buy is key.   If you’re lucky enough to gain access to the inside, look for these few items:

Windows

Check the windows to see if they look foggy or if the seal is sagging down in between the panes.  This would indicate the windows are not efficient and need to be replaced.

On older homes, look to see if the windows open.  If not, this is a huge fire escape hazard for tenants.

Water Heater and HVAC Mechanicals

Look to see the age of the water heater, heating system, etc.  This is a big expense to swallow if they are old and in need of replacement.  If there is a gas heater, look at the vent pipe above it and make sure it is angled to avoid ice buildup from condensation.  This buildup of ice can lead to carbon monoxide not being released and being sent into the home.  Chances are if the vent pipe is angled, the unit was installed professionally.

Water Leaks

Open the cabinet under a sink and check the base.  If the wood appears lifted and bumpy, likely there is or was a water leak.  Could be an aging garbage disposal that has rusted out or water lines in need of replacing.

Crawl Spaces

If you can peek under the house into the crawl space, see if you can notice a vaper barrier to protect the foundation.  If it just looks like dirt, likely  there is no vaper barrier to keep water away from the foundation.  This item alone can be time consuming and expensive to install.

Take a whiff.  Does it smell musty or moldy?  If so, mold remediation can be costly to address.  Definitely a must do when renters are involved.

Another good thing to look for when looking in the crawl space (or attic) is the materials used for the water, gas, sewer, and HVAC vents.  You want to make sure there is no lead or galvanized pipes as well as asbestos wrapped HVAC vent pipes.

If you really want to dig deep on an older home, use a screwdriver to remove the plate to a light switch or receptacle and check to see what kind of electrical wiring there is.  Thick, white coated Romex is great, knob and tube you’ll need to replace pronto.

Look Up

Check corners and ceilings for brown spots that indicate a roof or water leak.  Look for smoke detectors throughout the rental property.  You should find one in each bedroom as well the hallways and living areas.  Check around the top of the chimney for water stains.  There may be a need for some flashing outside to protect the roof.

Many of these items may seem quite obvious but we certainly have walked properties before that we “just love” and tried to overlook many of these issues.  Knowing they were there, we entered into a purchase contract only to have an inspection slap us in the face with the reality.  We are in this business to make money and some repairs are just not worth it.  In the end, we are glad we (or someone we hired) took the time to evaluate these structural items of the rental properties.

Check out our other blogs to guide you on your self-management journey as a landlord:

The Pro’s and Con’s of Holding Your Rental Property In An LLC

Why Landlords Need to Use Independent Contractor Agreements

10 Tips for DIY Landlords

Security Deposits: 5 Tips Landlords Should Know

Cash Reserves for Rental Properties, How Much is Enough?

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