There are three essential stages to a real estate investment… and flubbing any of the three could mean problems and lost profits. Of course, everyone has their own way of doing things and their own process flow… but every successful real estate investor will incorporate the three in their plan somewhere.

I’m not going to go over all three stages in-depth today… but I will explain an aspect in the first stage.

Stage 1: The property analysis.

In the property analysis stage, you as a real estate investor look at the property, the numbers, the tenants, and everything else from top to bottom. It is your job to make sure the property makes sense financially and to make sure the property is in good overall shape.

I know that one of the biggest concerns that I had before I bought my first investment property was what I was supposed to look for when inspecting the property before the purchase. Heck… I was still in the stage where I looked at spending any money at all (like for a professional property inspector to go over the property) as taking profits out of my pocket.

*A little side note here… one of the biggest things I have learned is just how important it is to loosen up the pocket book a bit upfront and save a whole lot of cash and headache in the end. I’ll teach you later on how to outsource to maximize your profits.

Anyhow, in this post I’m going to give you a little inspection list that should be a part of your pre-purchase routine. If you don’t fully inspect each property before you buy you could be paying way too much and costing yourself thousands in future repairs.

Here we go…

Pre-purchase Inspection List

Interior -

• Kitchen – need remodeling? Repairs?
• Kitchen appliances – need upgrades?
• Doors – need replacing or refinishing? How many?
• Walls – Need paint?  Need patching?  Need to remove wallpaper?
• Flooring – what needs replaced and how much?
• Bathroom(s) – updating? Repairs?  How much?
• Ceilings – need repairs?  Scrape popcorn texture? Paint?
• Any water damage or mold?
• Initial clean up – how many dumpsters are needed to haul off the crap?
• Trim – need any trim?  If so, how much?
• Electrical – need updating?
• Plumbing – leaks that need fixed?
• Floorplan – is the floorplan functional? what will need to be changed?

Exterior -

• Foundation – any cracks/sinkage? Will have to get them fixed before you sell
• Roof – need replaced or repaired? Any missing shingles?
• Gutters – need additional gutters/downspouts? need repairs?
• Paint – need a fresh coat of paint?
• Chimney – need repairs?
• Landscaping – need a bit of curb appeal?
• Garage – does it work? need repairs?
• Doors – need updated locks? need replaced?
• Decks and porches – need repairs or replaced?
• Termites – any sign of termites or damage?
• Junk – need to clean up junk outside? how many dumpsters?

Inner workings -

• plumbing – working well? need repaired?
• electrical – need updated/repaired?
• water heaters – still working well? need updating?
• heater – working well? need updating?
• A/C – need to add one? need repairs?

Intangibles -

• how’s the area – is the area appreciating and in good shape?
• market – is the market strong? other properties being sold in the area?
• demand – not overall demand… but demand for this type of property?

There it is…

Of course, this list isn’t totally comprehensive, but it goes over pretty much everything.  Take this list and build on it to make your own pre-purchase checklist.  Every real estate investor needs to have a system for evaluating a property before purchase and creating a checklist helps negate errors in the system. 

If you are able to go through the checklist completely before every purchase you are sure to catch 99% of all problems before they bite you in the ass after the purchase.

I would suggest that you get a professional property inspector to come out and give it a quick once over as well… it wouldn’t hurt and it usually only costs about $125-200 for the average single family house (in my area anyway).

So… good luck and on your next investment… get in there and really inspect the property before you buy… it could save you big big bucks in the long run.

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Here's A Few Related Articles...

• Wholesaling Real Estate – An awesome question from a reader…
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