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
The winter holidays, including Christmas, Hanukkah, Kwanzaa and New Year’s celebrations, are fast approaching, and it’s a sad fact that these happy occasions often result in preventable tragedies. According to the U.S. Fire Administration, nearly 156,000 fires occur during the winter holiday season, causing 630 deaths, 2,600 injuries and nearly $1 billion in property damage. Yearly, there are more than 200 fire-related injuries and fatalities on December 31st and January 1st alone. Winter holidays are a time for families and friends to get together. But that also means a greater risk for fires and electrical hazards. See our compilation of suggestions from various fire and electrical organizations to help ensure a happy and fire-safe holiday season. See the entire article HERE.
Holiday Decorating – Ladder Safety
Decorating our homes with lights, garland, and reindeer in anticipation of the Holiday season will most likely include using a ladder. It’s been reported (American Journal of Preventive Medicine, May 2007) that accidents involving ladders has increased dramatically in the last few years, and most injuries are incurred by older men. Ouch! That hurts.
Attention Small Business Owners – New financial help coming soon!
The Small Business Administration (SBA) recently announced new lending incentives to small businesses in underserved communities!
The Press Release from Wednesday states, “With small business owners and entrepreneurs in traditionally underserved communities continuing to face challenges accessing capital, the U.S. Small Business Administration today announced two new initiatives aimed at increasing SBA-backed loans to small businesses in these markets.”
If you own a small business or depend upon the patronage of many small businesses, this is good news! You can read the entire Press Release from 12/15/10 by clicking HERE (pdf file).
Moore Home Inspection Services now offers Property Preservation Services!
So what are Property Preservation Services? Well, we all know how many vacant houses are popping up in the St. Louis metro area…and every one of these vacant houses needs to be properly maintained until a new occupant moves in and takes over. Property Preservation Services (sometimes called “mortgage field services”) basically consists of the following:
- Winterization (preparing a vacant house to withstand the freezing temperatures of winter)
- De-Winterization (yep, you guessed it…undoing a winterization)
- Trash-Out (clearing all trash and debris from inside and outside a vacant property)
- Lock Changes (changing all the exterior door locks for security reasons)
- Property Securing & Board-Up (making sure that the interior of a vacant property is properly secured)
- Sign Creation/Placement (helps out-of-town real estate companies advertise their listings)
- General Cleaning (making a vacant property “sale-ready”)
- General Inspections (offering a general overview of the vacant property)
- Initial or Recurring Lawn Care (taking care of the exterior landscaping at a vacant property)
- Photo and Video Documentation (being the “eyes and ears” inside the property for those who can’t be there)
You can see more about these new services at our Property Services web page. You can also check out these videos of some of the work we’ve already performed!
I almost burned my hand on a dimmer (rheostat) switch at an inspection recently. The cover plate and switch surfaces were almost 170 degrees F (see photo)! While most experts say this is not necessarily a fire hazard, the older rheostat switches can become very hot during use and can waste a lot of energy. You can find an interesting article about rheostat switches HERE.
I ran across this article recently that provides tips on spotting bad rehab jobs. For the most part, I believe most local St. Louis rehabbers are decent and provide a great service to our sagging real estate market. However, you always want to watch for those who may cut corners or fail to take care of important repairs. For tips on what to look for when previewing a rehabbed house, check out the article HERE. And once you’ve narrowed down the field to one house, call us for a comprehensive evaluation.
Well, it’s full blown summertime in St. Louis and that means most homeowners are relying on their central air conditioning systems to keep their families and pets cool. As I write this, my wife and I are waiting for an HVAC technician to come out and fix the fan unit on one of our exterior cabinets. This fan unit stopped working the other day and we’ve been without cooling on the main floor of our house throughout the entire July 4th holiday weekend!
Although proper homeowner maintenance wouldn’t have prevented our fan unit from failing, such maintenance is still very important to keeping your systems running strong. I recently came across a web page which gives a very nice overview of central air conditioning systems and how to maintain them. I highly recommend you visit this page (click here) and read the 4 page article. Most of the maintenance performed by homeowners on their AC systems is relatively simple but can make a world of difference on the system’s longevity and performance. Have a great summer and stay cool! - Rick Michalicek
I did a series of inspections today for a South Carolina property management company who just bought six properties in our area. My contact was a little dismayed when I called him to tell him this particular house…well…wasn’t a house! The first one I pull up to was only a foundation! The upper frame portion of the house was nowhere to be seen, and the foundation itself will need to be demolished and redone. At least it was in a decent neighborhood!