You want to buy an investment property to rent out so you get immediate income or to flip for a fast profit? A lot of future rental properties need a little TLC. They may need a deep clean, some painting, replacing carpets or appliances, or some outside work. This is quite usual, and something you take into account when you write your initial offer. You also know that your home inspector may discover something that the current owner will pay for or you can use to renegotiate the price. The last thing you want is for your property to develop a serious maintenance problem that will cost you time, money, and hassle. These maintenance hazards are not always obvious, even to professional inspectors. Here are two to look out for.
Kitec Plumbing Materials
The Kitec brand was a great idea on paper; easy for a plumber to install because the pipework is bendable, and it stays bent to easily fit round corners and up behind drywall. The problem is that the different metals in the pipes and joints interact and they set up an electrical charge that destroys the piping. Because the aluminum pipe is plastic coated, it is difficult to see a problem. In 2011 a class action lawsuit resulted in a $125 million fund to address leaks and replacement issues.
Owners with Kitec plumbing systems have until January 9 2020 to make a claim. Buying a home with this kind of future maintenance hazard may be a poor investment, especially if several leaks occur, and the whole house has to be replumbed. Even without catastrophic failure, Kitec joints may leak one at a time for years.
An Old HVAC System
Many owners ignore their heating and cooling systems until something goes wrong. Many do not even replace the filter very often. The result is that there can be a running supply of maintenance hazards to look out for.
Dirt in the ducts can lead to allergy attacks and illness. Dead vermin, old food tossed away by a contractor, and mold have all been found in ductwork. Apart from losing rent because a tenant moves out, a full clean and disinfecting of a home HVAC system costs anywhere from $400 up. Low cost "cleans" often miss the corners of the ducts, so they need cleaning again.
Leaking refrigerant because the condenser is old is expensive, especially as freon will no longer be an approved product in a few years.
Old condensers often do not have the upgrades that prevent snakes and other animals from getting in and short-circuiting the unit. New condensers cost more than $2000 to replace.
Old air handlers are inefficient, cost more to run, and are also subject to fail, and need replacing.
Old HVAC systems that have not been properly maintained are an expensive maintenance hazard waiting to happen.
Older properties may be less expensive to buy but can be more expensive to own. Wise investors get a thorough home inspection carried out by an expert and experienced professional. That way they avoid expensive maintenance projects when they should be collecting rent or making a quick profit. When it comes to arranging financing for your investment property, please contact us.