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Home Inspections 101

Home InspectionsBuying a money pit is one of my greatest fears. It’s a fear I have because we’ve done it.

Looking back there were so many red flags about this triplex in Toronto that we ignored because we had a motivated seller on our hands.  We had very little money when we purchased this property but the seller pulled some strings with his bank, our realtor gave us a private loan, and we scraped up the rest of the funds we needed to do the deal.

The property held together ok for about a year but then everything began to unravel. And over time we’ve had to deal with many surprises:

  • Clay pipes that had totally disintegrated leaving only tree roots to guide the sewage and water out of the house;
  • Telephone wires that had been used as electrical wires deep within the walls … which began to catch on fire before they shorted out completely (took us $5,000 to find the problem and another $20,000 to fix it);
  • A leaky roof which is still not resolved even after having the roof redone; and
  • Shoddy bathroom renovations that had tile on top of tile and an elevated toilet done for no other reason than the person who did the work was lazy and cheap.

Unfortunately these were in addition to the things we had expected which included replacing the garage, landscaping the front and back yard and updating 2 of the 3 kitchens.

And when we tell people the stories they all smugly say “Well I guess you get all your houses inspected now don’t you?

Sorry folks but we had that house professionally inspected too!! The reality is that inspections don’t tell you what’s going on behind the walls or beneath the surface of the home. All of the problems we mentioned above were not visible to the inspector. We knew the home needed some work but NONE of those things were identifiable by the inspector. I have already written about the red flags we should have recognized that would have told us to expect more surprises but the reality is that a home inspection doesn’t tell you everything about the condition of a home.

So why bother with a home inspector if they can’t find these problems? I am still a big fan of home inspections even if they aren’t going to tell me everything and here’s why:

  1. Home inspectors know the kind of problems to look for in specific areas. For example, the house we just purchased has an oil tank and an oil furnace. That is our first. He explained the challenges, benefits and things to watch out for with an oil tank and oil furnace.
  2. Home inspectors go through the home methodically and with a level of detail I just can’t tolerate. I was exhausted watching the home inspector test all the outlets and taps in the house we just had inspected.
  3. The inspection report gives you an excellent starting point to plan any updates and renovations you might want to do. It also can identify other professionals you might want to bring in.
    Provides a learning opportunity for you. Every time I sit with an inspector or I read an inspection report I learn something. And now when I look at potential purchases I carry that knowledge with me.
  4. The inspection report gives a lot of comfort to prospective tenant buyers when you are doing a rent to own.

There are other professionals you can hire to investigate the plumbing, electrical and furnace issues that may be lurking behind the walls. Plumbers have cameras they can send into the pipes to see what is going on. Electricians have ways to test the wiring and furnace folks have the right equipment and expertise to look inside a tank to tell you how much life it has left.

Now I’m not an inspection expert by any means but I can tell you the questions I ask an inspector. And if the inspector doesn’t know I try pretty hard to find out before I buy a house:What kind of wiring is in the home? If you have knob and tube wiring you’ll find it VERY difficult to get insurance when it’s a rental property so this is an important question.

  • Are the outlets properly grounded?
  • What is the water supply? Is it private or public? If it’s private there are a lot of other issues to sort out like the location of the well, tank size and condition. These are issues I prefer to avoid.
  • Is the piping copper or galvanized or PVC?  Galvanized pipes were used a long time ago and can cause you some grief as they corrode and have been said to leak lead into the water. Copper is probably ideal but I know PVC is cheaper and easier to work with. I am far from a plumbing expert though!
  • Is the sewage private or public? As with the water source I am not a fan of dealing with septic tanks so I prefer public sewage disposal.
  • Hot water tank type and condition?
  • Heating source and it’s condition?
  • Strength and life of the foundation?
  • Any drainage issues and/or water stains in the crawlspace/basement?
  • Roof type and number of years left?

The inspection report covers way more than these issues but these are the issues I concern myself with once I know the house has good bones. In other words, there are no signs of moisture, the foundation is good and the structure of the home is solid.

These are the issues that arose with our money pit. And to this day we have yet to solve the leaking roof problem. Everyone says it’s someone else’s issue … and all we know is that we’ve had to redo the ceiling in one of the rooms twice already and we still don’t have the source of the water identified!

But we love our money pit! It’s in such a high demand rental area that we’ve had bidding wars over our basement suite! It’s steps from a subway station, less than 10 blocks from the University of Toronto, minutes from a major hospital and it’s less than 5km to downtown Toronto. This one single property generates nearly $5,000 per month in rent!! And now that we’ve replaced nearly every major piece of the home we just have to find that darn leak and we’ll be sitting on some seriously wonderful positive cash flow each and every month from this place.

And thanks to this triplex we’ve learned what you can and cannot expect an inspector to know. And we’ve become very savvy buyers … hope you will too!

Published on March 17th, 2010

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