subject: Home Inspection Clause when Buying Real Estate Investments [print this page] Home Inspection Clause When Buying a Real Estate Investment Property I recently got a property under contract in Royal Oak, MI. Its a nice 3/1 on a crawl space. I figured there to be about $5000 in rehab costs which would include updating the kitchen, paint and carpet. When I went to sign the contract, the seller had it written so
I was waiving the inspection clause. This is something you CANNOT let happen! NEVER waive your inspection clause!
No matter what your exit strategy is, be it wholesale or buy and hold, keep your "outs" in the contract and do not waive your rights to inspect the house! Needless to say, I changed the contract to allow my inspection within 7 business days and the seller agreed.
This Royal Oak, MI house is the perfect example of why you want to have every house inspected by at least your contractor! I met my contractor at the property and proceeded to walk through it with him. When we got to the kitchen, I noticed the floor was slanted and raised in one area. It was not that bad, but we decided to get under the floor into the crawl space to find the reason. In fact, we found a great deal more information.
There apparently had been a fire with an old furnace that caused some damage to one of the beams under the floor. This may have caused the beam to crack and sag thus lifting the other side of the beam and therefore the floor above.
Now, according to the contractor, this may not be that big of an issue. However, in his bid, he allotted for at least $2000 to fix the floor. This means it could be opening a can of worms and creating higher rehab expenses.
This wasn't even half the inspection report, although it was the most nerve-racking. My contractor figured for some roof repairs that I missed in my walk-through as well as the need to vent the attic. After all was said and done, the cost more than doubled up to $12k!
This is why you have every house you get under contract inspected by a professional inspector or at least your contractor! Whether your wholesaling the house, buying and holding, or rehabbing for retail (flipping), NEVER EVER waive your right to inspection!
BTW, I will find out today from my partner whether or not we move forward with the rehab.
Home Inspection Clause when Buying Real Estate Investments
