News stories about Fannie Mae and Freddie Mac which may have an impact on real estate investing…
Fannie Mae and Freddie Mac pressured to rent more foreclosures. See the link HERE.
Sen. Jack Reed (D-R.I.) sent a letter to the chief regulator of Fannie Mae and Freddie Mac, urging the two companies to convert their repossessed properties into rental units and pool them for sales to investors.
In his letter to Federal Housing Finance Agency Acting Director Edward DeMarco, Reed said the government-sponsored enterprises could install a major rental program that could milk at least some revenue out of properties otherwise sitting vacant.
Freddie could take more than a decade to unload REO inventory. See the link HERE.
Freddie Mac vendors sold fewer REO properties in the third quarter than they did earlier in the year as nonperforming loans continue to climb.
If the current trend holds, and the GSE reduces a net 1,000 REO from its inventory every quarter, it would take 60 quarters to unload its entire inventory — roughly 15 years.
Work the foreclosure, but don’t skip the inspection. Trying to save a few hundred dollars may cost you thousands! Click HERE to see our post about the importance of getting Residential Real Estate properties inspected.
Many property owners have been backed into the role of reluctant landlord in recent years, opting to hold their properties as rentals until the prospects of selling real estate improve. In the present landscape, landlords who have an existing relationship with a tenant who has proven his or herself both fiscally reliable and personally responsible count themselves lucky. Don’t get caught in the trap of taking a good tenant for granted. Below are some ways to encourage a favorable tenant to consider extending or re-signing their lease agreement. Read the full post HERE.
Many property owners have been backed into the role of reluctant landlord in recent years, opting to hold their properties as rentals until the prospects of selling real estate improve. In the present landscape, landlords who have an existing relationship with a tenant who has proven his or herself both fiscally reliable and personally responsible count themselves lucky. Don’t get caught in the trap of taking a good tenant for granted. Below are some ways to encourage a favorable tenant to consider extending or re-signing their lease agreement.
Know the Area Rental Market
Many landlords who have current tenants don’t keep abreast of current rental trends in the area surrounding the rental property. Often, property owners won’t begin surveying the local rental market until after their tenants have already given notice that they won’t be renewing the lease – in which case it may already be too late to keep that tenant. Rather than being forced to react, take the initiative and begin studying local rental trends – even if your tenants have months and months left on the lease.
Keep tabs on the overall vacancy rate in the area surrounding your rental property (not simply the immediate neighborhood). Maintain a strong knowledge of rent rates in the area and of any seasonal rental trends that may be pushing rent up or down. When checking rental rates, don’t simply compare rent between your property and rentals of comparable size or amenities. You want to have a clear picture of what other properties might be available on the market. For example, are there larger or more elaborate rentals listed just above your property’s rate that may tempt your current tenants? Are smaller rentals going at steep bargains, potentially swaying your renters to downsize? Continue reading →
As a trained home inspector, I have opened and inspected hundreds of residential electric panels. Whether they are main service panels or subpanels, there always seems to be a short list of recurring issues in these panels. This post is designed to help you identify these potential problems and be able to contact a professional to have them corrected.
IMPORTANT NOTE: Identifying these problems at your home’s electric panels requires that the outer enclosure covers be removed! Various precautions should be taken when doing this. I recommend using a working voltage detection device (volt stick) to tap the outer panel cover FIRST before touching the panel. If it chirps, you’re done…call an electrician! If no outer voltage is detected, I further recommend using gloves and hand tools listed for safe use during electric panel work (rubber gloves, insulated screwdriver, etc.). Also consider insulating your entire body by choosing some non-conductive “pad” or other object on which to stand while inspecting the panel. Bottom line is this: If you’re not comfortable removing the cover, leave it to a professional electrician.
With that disclaimer out of the way, I want to get right to the list of the most common problems I see inside the panels. Keep in mind that there are dozens of separate problems which may occur inside a home’s electric panel. These are just the most common ones I see.
1. CORROSION. Corrosion is perhaps the most common problem I see and it ranges from very slight to excessive. Any source of moisture, be it humidity, a dripping faucet or water entering a frayed main service wire, can do serious damage to electric panels. Eliminate all sources of moisture, even general interior humidity, as these will likely lead to corrosion inside the panel. Only slight corrosion may not warrant any action. But once corrosion gets bad enough, connections become compromised and repairs/replacements must occur.
I’ve heard from several inspection clients recently that they were planning to “go tankless” with their home’s water heating systems. This prompted me to search out information on tankless water heaters so I can be more informed about them myself. During my search, I found several excellent resources on the subject and I’ve listed them below.
It seems that most of the folks I’ve talked to learned about tankless water heaters from watching home improvement TV shows (PBS, HGTV, etc.). But after some seminar education and having seen some of those shows myself, it’s quite clear that “going tankless” is a much more intricate and complicated prospect that deserves some basic research and understanding before making a decision. Continue reading →
As many of us know, several severe storms and/or floods hit the State of Missouri in late 2010 and early 2011. In particular, the tornadoes which struck Sunset Hills on December 31st, 2010, a huge chunk of St. Louis County on April 22nd (including Lambert St. Louis Airport) and Joplin on May 22nd. Additionally, many homes along the Missouri and Mississippi Rivers were flooded during the Spring and early Summer of 2011. All of these disasters have left dozens of homes destroyed, condemned or in need of major repairs.
As a part-time inspector for the City of Ferguson, I’ve driven by many of the homes which were affected by the April 22nd tornadoes (see my photos above). Some buildings had to be torn down, but most of them were salvageable and will likely be rebuilt. Over the late Spring and Summer months, I noticed a huge influx of contractors and their crews as I drive the streets in Ferguson. Seeing such a beehive of activity made me want to post some information on potential contractor scams. Inevitably, someone with storm damage in our area will likely get burned by a contractor with a poor reputation or a shady past.
I found an article online which gives homeowners some basic tips on how to properly choose a contractor after a disaster.
The title is “10 Ways to Avoid Contractor Scams” and you can read that article HERE.
Believe it or not, this is not the first time I’ve seen a bullet embedded into a roof. I’ve seen this at least 2-3 times since I’ve been doing home inspections! These photos were taken a few weeks back at a house I inspected for a rehabber. It looked like the bullet was traveling straight down when it hit the roof.
Although I can’t be sure, I think it was probably fired off during a New Year’s Eve “celebration”; an all too common thing to hear in St. Louis on that night. What these folks don’t seem to understand is that “what goes up must come down!”. And this bullet did just that…right into this home’s roof. It made a nice little hole, too! Thankfully, this one ended up on a roof shingle and not on a person!
Work the foreclosure, but don’t skip the inspection. Trying to save a few hundred dollars may cost you thousands!
Foreclosed properties are generally much cheaper than retail properties, which makes them very attractive to buyers. As inspectors who have scrutinized hundreds of foreclosure properties, we have seen the good, the bad and the complete money pits. Of course there are “diamond in the rough” properties out there, but most aren’t in pristine condition. With the odds stacked against them, the average buyer really needs professional assistance to ensure the greatest chances of success. When all due diligence is properly done by the buyer, success will likely result. And in our opinion, that due diligence includes using trusted real estate professionals such as Realtors, mortgage brokers, appraisers and inspectors. Whether you are purchasing a foreclosure as a personal residence or as an investment, we highly recommend you seek the advice of these professionals.
While foreclosed homes may appear to be very affordable from the start, they may quickly become money pits if knowledgeable professionals are not part of the process. Many of these foreclosed homes look incredibly appealing to buyers on the surface, yet some may have serious conditions that may not be noticed except by a trained eye. A professional home inspection by a certified inspector could potentially save you from costly repairs and help you avoid some serious health and safety hazards.
Some alarming conditions may be visible when you walk into the house, but others may be completely hidden and may not get noticed, even if you’ve walked through the house several times. In the excitement that typically accompanies a home purchase, you may miss a lot of the home’s defects, especially on roofs and in basements, crawl spaces and attics; places which may not get much attention during a walk-through.
I used to think that we never had any problems with ice damming in St. Louis…well, not any more! I had a roof leak at my house over the weekend which was directly caused by the melting and refreezing of the ice above my rear roof slope. Check out these photos of the leakage problem and the repair work that I had to do…
* AREA OF ICE DAMMING *
The definition of ice damming can be found HERE (according to Wikipedia). In a nutshell, ice damming refers to leakage at a roof as a direct result of an accumulation of ice or snow on top of roof shingles. In most cases, an overly warm attic (uninsulated, usually) causes the snow/ice on the roof to melt, slide down and then refreeze in a colder location. The resulting “dam” can hold water and allow that water to flow backwards through the overlapped shingles and into the house. In my case, the icicles hanging down from the dormer roof above was causing a sheet of ice on the roof below. As the sun would come out and melt this thin ice, it would later refreeze and cause the dam area.
This was all noticed on a Saturday morning when I came downstairs to see my living room ceiling fan dripping water! Continue reading →
In real estate investing, there is no guarantee of success, no matter what anyone tries to tell you or sell you. However, we firmly believe there are steps that every investor can take to create a hedge against failure. In this post, we’ll be discussing one way investors can use information to their advantage, from the earliest stages of property evaluations through the entire renovation period. Our hope is that you find this post useful and informative.
The inspectors at Moore Home Inspection Services are ASHI Certified and have inspected hundreds of St. Louis properties for dozens of local and out-of-town investors. As many of you already know, a large percentage of activity in the St. Louis real estate market in the last year or so has been done within the foreclosure and distressed property segment and not in the traditional home buying segment. That means investment opportunities and activities have been on the increase.
In order to change with the market, we’ve recently designed a specific service program to meet the needs of real estate investors; services designed to educate investors about the properties, keep their projects on track and help them achieve success. This new program is called the “Rehab Right” program and you can see more about it HERE.
Not all foreclosed or distressed properties are a great buy and if you’re not fully educated on the property’s condition, the quality of work from the contractor or on the general buying process, an investor could potentially make a poor decision. Unfortunately, we’ve witnessed such failures many times. We firmly understand the difficulty of investing your time and money into a project only to end up breaking even or even losing money.
But your work does not have to end in disappointment – help is available. At Moore Home Inspection Services, we not only assist with determining the initial property conditions, but we can also inspect the progress and completion of your contractor’s renovations during the entire renovation period! We keep a database of contractors and we are willing to provide their contact information so you can get bids and otherwise qualify them for your specific project. We also keep a database of Real Estate Agents who are experienced in Investment properties and we are willing to provide their contact information so you can get expert help.
And don’t think that you should dismiss all inspections just because your contract has no inspection provisions. The Rehab Right program is not just about the initial, pre-purchase inspection, it’s also about helping you find the right property, helping you keep an eye on your contractors, and being your local advisors about utilities, local municipalities, etc.
What’s more, our Rehab Right inspection reports are not littered with paragraph after paragraph of language that’s not helpful to an investor. Simply put, we include in our reports things that are of value to an investor and none of the meaningless or repetitious information normally found in a normal 40-50 page inspection report. For example, if the home’s kitchen looks like this…
…we won’t waste your time (or ours) by including any repetitious or unnecessary details. You already know the kitchen needs a full rehab.
Our inspectors have actual real estate investment experience and, with the Rehab Right program, we have purposed to be different than other local inspectors. More than just facts and details, this program provides you with the inspector’s personal opinions about the property, the neighborhood or any other conditions that may affect your return on your investment.
We also encourage any real estate investor to cover all bases when it comes to inspections. That means considering adding other peripheral inspections like termite inspections (sometimes required by lenders), septic or well inspections and a host of environmental testing (radon, asbestos, mold, lead, etc.). Talk to other investors or your Real Estate Agent about the benefits of these additional inspections. Termite inspections and radon gas testing are available to you at additional costs.
If this program intrigues you, give us a call at (314) 727-6868!
As home inspectors, we inspect hundreds of homes for potential home buyers, sellers and investors each year and basement moisture is one of the greatest concerns we hear from our clients. The solutions and advice for fixing wet basements and crawl spaces seems to vary widely and some solutions are quite expensive and invasive. After doing inspections for many years, we recognized that some of the simplest and least expensive solutions are not often recommended or even understood. And unfortunately, many expensive systems are installed to help eliminate the moisture when simpler and cheaper options would have been sufficient or even superior. That is why we are offering this advice to homeowners about wet basements. So why should you listen to a home inspector and not a professional waterproofing company? Remember this truth: Basement waterproofing companies are in business to sell waterproofing systems. Therefore, it is not in their best interest to offer advice on the simpler and sometimes less expensive solutions which can often be implemented by you, the homeowner. These simpler methods will be the focus of our advice.
To Sump or Not to Sump?
We are not advocating to completely disregard the advice and waterproofing systems offered by reputable waterproofing or foundation repair companies. We are simply recommending the application of proven and less expensive methods before installing one of these costly internal drainage systems (sump pump systems). We also believe that different foundation wall types respond in different ways to exterior water (with regard to water penetration). Poured concrete foundations seem to accept sump systems quite well, as long as water is not penetrating through any settlement cracks. However, sump systems may not always be the best solution for certain types of unitized wall structures (concrete block, brick and stone). Here’s why…
Concrete block, brick and stone foundation walls are built out of individual units stacked upon each other with mortar between their joints which binds the materials together. Unfortunately, these mortar materials are prone to deterioration from exterior water and often deteriorate over time and become porous, failing to keep out the water. This leads to water seepage directly through the wall unit joints and results in a wet basement or crawl space. So why wouldn’t a sump system help in this case? Essentially, sump pump systems do not eliminate water entry, they just move it from one place to another once the water has entered the sump system below the basement floor. The water is “managed” but is still coming in.
To make matters worse, in unitized wall structures, moisture from outside can become trapped between the joints of the wall units or between finished surfaces which may allow wet conditions to go unnoticed for extended periods of time (especially in finished basements and in crawl spaces). While installing an internal drainage system would likely catch most of the water which came through the wall, it would do so only after that water has entered the basement and was channeled to the sump pump pit. So, such a system will not prevent the water from deteriorating the foundation wall units, mortar or other foundation components upon which the upper framework of the home depends for stability. It is possible for a stone or block basement to seem dry all the while the foundation wall is slowly deteriorating. That’s why sump pump systems are not always the best solution. Only exterior water management will keep the water away from the foundation to begin with.
Therefore, improving the performance of exterior water management components (gutters, downspouts and the sloping of soil/flatwork grades) would be the most appropriate solution in the example above. Such improvements should be done in conjunction with sealing and repairing the deteriorated mortar joints at the foundation walls (inside and outside). Exterior modifications are also likely to be less expensive and not require the work of a professional water proofing company.
Exterior Water Management
Directing water away from the foundation is the key. Water can be very destructive to almost any material including wood, rock, steel, masonry and concrete. So it must be managed or eliminated if at all possible. So how does one do that on the outside of a house? By implementing some or all of the following exterior solutions:
Proper exterior soil/flatwork grading. The proper sloping of the ground surfaces adjacent to the home’s foundation walls is perhaps the single greatest improvement that can be done outside. The proper “grading” of the soils and concrete/asphalt flatwork will help channel rain water and melting snow away from the house in the first place. Improvements to grading are a proven method for reducing wetness in basements. However, not all properties or sites will allow improvements to the grading, especially when other homes or structures are placed very close to the foundation. In these cases, other measures will likely be needed.
Also keep in mind that landscape boxes or terraces, if not designed right, can collect and hold water like a bathtub and allow that water to rest directly against the foundation wall. We recommend all landscape boxes or terraces be constructed with proper drain systems to allow water to drain out and away from the house.
Improving the pitch of the soils which rest against the foundation walls will help direct water away from the structure. In most cases, simply adding non-porous soils in a sloped fashion near the walls can significantly improve water runoff. These soils must be impervious to water, like hard clays. Such new soils should slope at a minimum of 1 inch for every foot and extend at least 6 feet away from the house.
Improving the pitch of your concrete or asphalt flatwork may require that the slabs be repositioned or sloped away from the foundation. This will likely require what’s called “mudjacking”, where the slabs are “jacked” back into a desired position by injecting a concrete mixture below the slabs. In some cases, however, mudjacking may not be possible. In those cases, the flatwork may need to be removed and replaced or simply sealed where it meets the house.
Properly functioning gutter and downspout systems. Next to exterior grading, the proper function of the gutter and downspout systems is crucial to exterior water management. A gutter system does nothing more than handle the water that is shed from a roofing system or overhang. If this system is clogged with debris, damaged or poorly designed, it won’t get the water where it needs to go. For most homes, proper gutter function usually means nothing more than keeping the gutters clean and extending the downspouts away from the house.
There are a variety of ways to achieve proper gutter performance including regular cleanings and the installation of gutter guards or cap systems. These systems channel water into the gutters but keep out the leaves, sticks and debris which clog the system. Some gutter guards are excellent while others aren’t worth the time and money you put into them. Be sure to do your due diligence when assessing these products. Aside from installing gutter guards, one of the best things you can do is simply cut back the tree branches near the perimeter of the house. The trees create the debris so the more you are willing to cut them back, the less debris you will have.
The gutter systems need to be installed and sloped properly in order for the entire system to work. As home inspectors, we regularly see gutters which are improperly designed or installed and won’t allow for proper drainage.
Additionally, all downspouts must be free to drain and should be directed as far away from the house as possible. Downspouts should never terminate right at the base of the foundation walls or in poor drainage pockets around the house. For most downspouts, this means simply adding a drain extension or pipe. Simple splash blocks typically do not direct the water far enough away from the house and are not recommended. Proper downspout performance may also require the installation of subsurface drain pipes where the drain pipe is buried below soils. This is especially true if various objects like sidewalks, landscape boxes or driveways are in the path of the drainage route. If you bought your house with existing subsurface drains, you should test them with a garden hose to see how well (and where) they are draining. Old subsurface drains are notorious for poor performance. If in doubt, create a new drain.
Installation of French drains or swale drains. In some cases, exterior grading and gutter performance may not be enough to keep water away from the house. In those cases, the installation of a French drain or swale drain system may be needed. For example, some homes are built on steep slopes with soils tilted directly at the front or rear walls of the house. Simply pitching soils against the rear wall wouldn’t be sufficient to halt the water. A subsurface French or swale drain system may be the only way to go. Keep in mind that some of these systems may cost as much or more than a basement sump pump system. But for reasons already stated, we feel it is still best to attempt to handle water outside first. Check out this video for more details.
Additional videos have been added below for viewing other possible solutions.
Maintain solid foundation wall mortar. If the home’s foundation uses block or stone, the mortar in the walls must be maintained. Although the maintenance of foundation wall mortar doesn’t directly help direct water away from the house, it should not be overlooked in the larger scope of water management improvement work. Proper mortar conditions should be maintained at both the exterior and interior of the foundation walls so that any water which does hit the walls doesn’t find a way inside.
Good, short demonstration on keeping soils pitched away from house; Shows poor slope
Good, short demonstration on keeping soils pitched away from house; Shows good slope
Longer video; Inspector points out poor grading, high soils @ brick and downspout problems
Good mod length video with inspector pointing out poor drainage; Example where French drain application may be appropriate.
Short video that focuses on downspouts; Good and to the point
Flooded basement; not real helpful; just shows what we all want to avoid
