The American Education Institute

Each real estate investor must have a Purchaser’s Inspection Record and/or Report.  This Property Inspection Record and/or Report will assist each serious real estate investor in determining the fair market value  of the investment property by providing a tangible total cost estimate to not only purchase the investment property but also to provide the estimated cost of installing and repairing mechanical and non-mechanical items to make the subject property more marketable to a specific type of real estate investor.

PURCHASER’S INSPECTION RECORD

Property Address: ____________________________________City___________________ State _______________Zip______

Date of Inspection: ________________ (Conditions are noted by the potential purchaser as of this date and may or may not become contingencies to a purchase offer.)

PROPERTY EXTERIOR: Present/Acceptable              Unacceptable & Why              Estimated Cost to Make Acceptable

Grounds

Lawn, trees, shrubs

Septic system

Sewer Connection

Sprinkling system

Other features

Building/exterior walls

Foundation

Wood/trim

Roof

Chimney

Exterior lighting

Motion detectors

Other features

Property Interior:

Heating system

Cooling system

Hot water heater

Other systems

Electrical circuitry

IUnterior lighting

Smoke detectors

Alarms

Intercom

Garage door opener

Other electric

Plumbing piping

Kitchen plumbing

Bathrom plumbing

Utility plumbing

Other plumbing

Glass windows

Glass doors

Shower glass/mirrors

Window screens

Door screens

Other glass/screens

Appliances/ built-in

Kitchen oven/range

Microwave

Disposer

Dishwasher

Refrigerator

Properties / carpeting

Draperies

Other personal property

Remarks: __________________________________________________________________________________

Signature:____________________________________________________________________________________________

When you examine the interior of a property, the first thing you should notice is whether or not the doors and locks work.  (Don’t worry to much if the keys have difficulty moving the bolts or doorknobs because, should you actually buy the property, one of the first things you’ll want to do is change all of the locks.)  The doors may stick, however, or be poorly fitted to their frames.  As soon as you enter– not only the building but all interior rooms as well — you should look at the walls surrounding the door frames.  Are they cracked?  Again, if they are, it’s a telltale sign that corner of the building has settled.

The very next time to do whenever you enter a new room is look up.  Is the ceiling cracked?  Or, more commonly, is it badly stained (from water or other damage)?  If that room is right under the roof, a bad water stain usually means just one thing:  a bad roof!  Look too if the ceiling are freshly painted, and especially if that paint doesn’t match the paint on the walls.  These are more indications of a gad roof which produced bad ceiling stains which the seller has hurriedly tried to hide.  Look at the walls around all window frames, and be sure to check the ceilings and walls of closets.  Also check carpeting for the same reason.  If, for example, the carpet in one room does not match similar rooms elsewhere, it could mean water had damaged the floor as well,and the seller bought a new rug to hide that too.  (Apartment buildings are notorious for this.  If one apartment’s carpeting doesn’t match that in all the other apartments, investigate and find out why.)

Next, be sure to check any and all appliances that come with the property.  Operate all electrical switches and plug something into most of the outlets.  (It has happened where outlets have been installed–do doubt to pass governmental building inspections–but have not been connected to any wiring!)  Familiarize yourself with the infrastructure of the building; that is, the heating and ooling systems, hot water heater(s), and all the plumbing.  Run water, adjust thermostats, flush toilets, check drains, and locate all electrical control panels and shutoff valves.  Look for leaks everywhere, especially near plumbing fixtures and inside all kitchen and lavatory cabinets.

Looking for leaks also includes checking ceilings in rooms well below the roof levels.  Upstairs apartments, for example, can cause major damage to downstairs apartments if leaks or overflows occur there.  Water may be the source of all life, but in buildings it can be more harmful than fire.  And regarding that, be sure to check attics, crawl spaces, and life up and look behind removable ceiling or wall panels too.  If that building ever had a fire, chances are good you’d find evidence of charred studs or joists which are hidden behind the paneling.

Just by doing this much, by personally and systematically checking all these physical aspects of every single property you’re tempted to buy, you can save yourself a houseful of future headaches and misery.  If the discoveries you make in this fashion are serious enough, you won’t buy that property.  If they’re not that serious, you may still buy the property but, by pointing out these flaws to the seller, you should be able to reduce the asking price.  If you truly know what you’re doing and it’s obvious that the seller doesn’t, you might be able to reduce that price by a great deal, and then turn around and fix the problems later for very little expense.  One thing your systematic appraisals will always do for you:  They reduce future unwanted surprises.  For that reason alone, you should thoroughly check out every place in the future that you’re ever tempted to buy.  (Use copies of this page and take one with you whenever you go to inspect a new property.

Dr. Eric T. Martin / 100% Financing When Buying Real Estate / 8-3-09