Houses can have lots of problems Real estate investing requires expertise in recognizing these problems and the costs for repair. Sometimes you stumble onto a jewel investment by discovering a house where mom was an excellent housekeeper, and all thats necessary is minor cleanup of the premises to prepare for selling. But the truth is that most people dont even sweep the floor when they move after the house is sold. And sometimes the house they leave behind is a wreck. If a yard looks trashy and overgrown, you know how to pick up the garbage and mow. If the walls look drab and shabby from years of neglect, you know how to replace new wall paneling or repair holes with wallboard mud. If these basics are not understood, you can always get a quick lesson at your neighborhood Home Depot or Loew's. But zilch experience is necessary for slinging a paintbrush, unless you are just sloppy. Paint is the easiest of options in giving fresh renewal to property. Cosmetic repair is simple and easy. You can either do it yourself or hire a handyman. Houses that really only need some yard work and a few gallons of paint are readily found in the real estate buyer's market. But these houses tend to be far from deeply-discounted or bargain-priced investments. Some house problems constitute severe potential pitfalls in real estate investing. The most critical problems are foundation irregularities and mold. I inspected a house recently that had serious foundation problems. My attention was first called to the entrance steps with broken brick due to shifting of the house on its foundation. As I walked around the inside of the house, I saw that the sheet rock had cracked in several places on the level above the entrance steps. What was obvious to me was obvious to every other buyer who had seen the house, which explains why the property had been on the market for over 200 days. So as this red flag went up about the foundation problem, my curiosity was also raised about the cost of repair. I know nothing about foundation problems, and I would never tackle such a problem on my own. But I knew there were specialists in the area with expertise in foundation repair. So, I got a couple of estimates before deciding if the purchase price was fair. Mold!!! One of the most serious problems in buying any house today is mold contamination, especially in the southeast. This is a recent problem that we never experienced in the past with such prevalence. Let me warn you: repairing a mold-infested house can cost you big bucks. Even in excess of $100,000! An infested house must first be tested by a certified lab to ascertain the extent of damage. A third-party contractor usually takes responsibility for repair after the initial test. Then the testing lab must re-evaluate the premises after repair to confirm whether toxicity levels have been reduced to acceptable standards. Then, and only then, can you re-enter the property to make modifications or paint. You are in a heap o trouble, boy, if you buy a house WITH MOLD, unknowingly or knowingly, and if you fail to remedy the problem or try to sell without disclosure. Just write it off as a bad experience and bad investment if you buy without taking remedial costs into consideration. Mold is a serious problem in today's housing market. This warning doesnt mean you should not buy any house with mold infestation. You can obtain firm bids (not estimates) for repair on some situations. However, damage can be so severe and widespread that even mold-removal firms will not even quote a firm bid! Factor the remedial repair into the buying price and the selling price. Be prepared, however, that it just wont work in some cases. Mold is damaging to health. Some people are more sensitive to mold than others. Mold replaced the asbestos scare of the '70s and '80s when Texas homeowners sued insurance companies for millions of dollars over mold damage. The mold problem has migrated from the South and is moving into northern states. Many Alabama insurance companies went out of business because of the mold problem, and those insurers left usually refuse to insure any house with mold history. Dont let mold catch you with your pants down! Most houses have some kind of problem or problems. Learn to distinguish between the cosmetic and serious problems, and recognize that solutions are usually available for either. You, the real estate investor, must become a problem-solver of house problems. |
