What to look for in a property?

[fatmaxxv]

I made an offer on a property with intentions of renting it. Worth approx. around $100K-$105K. Offer accepted at $81K. Spent $50 on option money for inspection and there were 3 main/ huge problems on the property:

1. Double wires found breaker box.
2. Slab foundation is 1" difference in 4ft. with stress in slab and wall.
3. Gas leakage detected.
4. Last problem: Heater has not been working. As far as I know, it did not work last winter (Tenant was still living in the property when we did the inspection yesterday).

I found this property (pre-foreclosure) from an investor who was trying to flip it to me. I'm rather new and not know what to inspect/ look for when I am in the property. Can you share your experiences/ tips?

Do you have a property inspection toolbox?

Since investor/seller only owns the property for about 2/3 weeks now, sometimes I wonder if he/she ever been into the property. Seller's disclosures looked ok, "Not aware of any problems", while the tenant had complained to the previous landlord that the heater wasnt working. What good is a Seller's Disclosure notice then?

A different inspector had previously inspected the property and in the property itself, the inspector had flagged "gas leaks" in the house. Can the seller not know about this?

When I go back to counter-offer the contract, I will tell the Seller about the 3 major problems. Is that a known fact to the Seller now and must disclose this in an ammended form to warn other buyers (if I decide to walk away)?

When I requested for Seller's Disclosure notice, this statement was disclosed:
P.s: This property has been previously inspected. As you are aware that this property needs some work, the Seller is at the bottom and all repair costs will have to be added to the purchase price.

Should I still counter after that statement?[size=18][/size][size=24][/size]

[makenmoney]

Fatmaxxv,

Here are a few of my thoughts regarding your property.  It sounds like it has major problems.  Does the foundation need to be repaired?  Centex house leveling will do a free estimate for you.  Are the gas leaks related to the settling foundation or just something simple as a loose connection from a stove? What is it going to cost to get it repaired.  What is the heating going to cost you to repair.  If you know a HVAC repairman they should be able to give you a ball park estimate. What else will be effected when you make these repairs that will also cost you money. (ie. sheetrock repairs, plumbing problems, etc)  Do your homework!   If all of these things need to be repaired you are talking about some money and you need to be realistic about what it will cost you.

   Yes, you are right. Once these problems are reported to the seller he is required to disclose them to any future buyers after you. Will he?  Who knows!  Unfortunately I'm running across more and more "investors" that are just trying to scam a deal.  I've had one investor tell me, "If you find any problems in the inspection don't tell me about them".  We did (find problems) and we didn't (tell him) and his property is still sitting on the market after 9 months.  Guess he hasn't found that stupid person yet!


   So what if the seller says the property was previously inspected.  By who- his brother?  You are allowed to scrutinize the property for a  long as your option period allows.  So he says he's at his bottom price.  If he truely is and won't budge why do you want this property?  I would start with the $81K and start deducting repair costs from this price.

   Why would you want to add them to your offer?  You don't have much room between your contract price and the value.  If the value of the property is only $105 after repairs do you really want to eat up all your equity fixing these repairs.  It would be a different story if the property were going to be worth $150K.  Do you have the cash to put into the property and do you want to?  I suspect that you won't be getting a whole lot of rent for this house so you can't necessarily count on that to pay yourself back for repairs.    Are you financing this property?  I suspect a gas leak will have to be repaired prior to closing to even get the property insured.  

   Remember, there are a LOT of deals out there.  You may want to spend more time finding another one that truely is a deal than trying to force this "deal" to work.  
   Good luck on your decisions....Kathy