Profitable fix-and-flips begin with a careful assessment of the exterior of the home, which checks for defects that could be potential budget disasters. A good place to start your inspection is with these six areas, where seemingly minor problems can quickly escalate into major headaches:
1. Water Drainage
One of the first items to check for on the outside of a home is indications of water damage. Problems associated with water damage include foundation cracks and mold, which can be among the most expensive home repairs. Be wary of structures that have water pooling around downspouts, indicating poor drainage. Standing water along foundation walls creates damp crawlspaces, which in turn can cause foundation movement or cracking. Also, check for water wicking up the foundation. This can produce moisture damage and mold within walls and framing.
Warnings signs of a shifting foundation include windows that are out of square, uneven gaps at the top or bottom of closed doors and slanting floors. Foundation movement can also cause structural cracks near windows that let water penetrate inside walls, creating an environment conducive to mold growth.
If you see evidence of minor water damage and are still interested in the property, invest in an air quality test, which checks for the presence of air-borne mold spores. These spores are a major health hazard and very expensive to remediate.
Attractive landscaping is always a plus, but be wary of properties that have large trees near the house. Tree roots spread and can crack and clog sewer lines. If the damage is severe enough, the line must be replaced, which can cost several thousands of dollars. Your home inspector can tell you if interior plumbing is in good repair, but you need a sewer expert to evaluate the sewer lines. Sewer lines are inspected by threading a camera through that allows a visual inspection of the line from the house to the street.
An aged or poorly installed roof may allow water damage and result in expensive repairs or even a complete roof replacement. Improperly installed roofing materials can also cause a roof to age prematurely. The most popular roofing material in the US is asphalt shingles, which have an estimated life of 15 to 30 years. Asphalt shingles are the least expensive roofing material. Signs that an asphalt shingle roof is approaching the end of its life include shingles that are cupping, splitting, curling or lifting. Wood shingles exhibit similar signs of aging and must also be inspected for insect damage and rotting. Wood shingles are more expensive, but have a longer useful life of 30 to 40 years.
In warmer parts of the US, terra cotta or slate tile roofs are popular. A well-maintained slate tile roof can last for more than 50 years and some structures in Europe have tile roofs that are centuries old. The principal drawback of tile roofs is that the materials are fragile. Over time, weather-related expansion and contraction can cause tiles to crack or loosen. Another drawback of tile roofs is their weight. If you are replacing a shingled roof with tiles, you will likely need to reinforce the structure to bear the extra weight. This involves hiring a structural engineer to determine areas that need reinforcement and contracting a carpenter to perform the actual work.
Cracking shingles and other signs of aging may be difficult to detect from a distance so plan on bringing binoculars and a ladder to your home inspection. Some rehabbers also take videos of the roof. The video can be examined later and replayed multiple times.
Examine the south side of the house first since this is the side where shingles are more likely to curl. Also look for mismatched, patched, missing or misaligned shingles, which may indicate a poor installation job. These may also indicate a do-it-yourself repair necessitated by water leaks. Evaluate the roof lines of the house as well; if water concentrates in a few areas of the roof, the potential for water leaks is higher.
Chimneys should be inspected for structural soundness since chimney repair can be a major cost item. Particularly in older homes, check for missing bricks or large cracks in the side of the chimney. These repairs may require re-building the entire chimney. Loose or missing mortar, on the other hand, is often a simple fix.
Many older homes have concrete block foundations, which are weaker and more susceptible to water than the reinforced concrete foundations used today. Homes in some regions of the country may also have fieldstone foundations, which consist of irregularly shaped rocks that are mortared together. Fieldstone foundations are often leaky and crumble with age.
Minor cracks in the foundation are usually not a big problem, but larger cracks (i.e. more than a quarter of an inch wide) are a cause for concern, particularly in newer homes. Horizontal cracks must be assessed carefully as these may indicate poor drainage or grading that doesn’t slope properly. Wide horizontal cracks may necessitate rebuilding parts of the foundation.
Slab foundations are found in some older one-story homes. Although slabs are less prone to flooding or leaking gas, they do sometimes crack, feel hard to foot traffic even on carpeted floors, and are poorly insulators. Slabs can also make plumbing work most complicated.
At costs averaging nearly $5,000 for five to ten windows, window replacement is an expensive proposition. Windows may look fine from a distance but show rot when viewed up close. Aluminum clad wood windows are especially tricky; an exterior view may look fine, but inside the frame may be rotting. A simple test for rot involves pushing the window gently with a finger. There should be no movement within the frame. Windows that aren’t protected by overhangs are usually the first to rot so pay special attention to these.
Few houses are perfect and minor issues such as small foundation cracks or a few split shingles are not likely to be deal breakers. Still, identifying problem areas of the home’s exterior before committing to purchase can help avoid unpleasant and expensive surprises later.