It's time to get to work.
I've got a duplex under contract and 10 days to perform due diligence. Every Day. Every hour. Counts. I can't waste time now!
Step 1: with a tenant in the lower unit, I immediately ask for the formal lease to verify rent and legalities. Good news! The lease is in fact set for $850 per month:
The tenant has paid ON TIME over the current terms of their lease.
I also get my loan rate locked in. Here are the rates I got from my lender:
I lock in an interest rate of 5.25% for an extra $444.
Now, the fun stuff...I get an inspection ASAP which cost me $450. Price is generally determined by square footage and type of property. For example: the inspection for My Second Property (Single Family) was $310.
The inspection uncovered some issues...
-Excessive rust in both main panels. Recommend a licensed electrician evaluate.
-Both bathroom fans need to be repaired/replaced
-Driveway in poor condition
-Both garage doors to repaired or replaced
-Recommend a qualified contractor assess source of standing water in crawlspace and make repairs.
But, there were some good things too!
-Both furnaces are only 2 years old
-Both cooling systems are 4 years old
-Both water heaters are only 1 year old
-Roof structure, roof covering, gutters, and attic are all in good shape
*It's always great when your mechanicals are still at the early stages of their lifecycles*
*It's also great when the roof is in great shape*
Overall, YES, there are some concerns. The biggest one...and you might be able to guess...is the STANDING WATER in the crawlspace. Also, the rusted panels are a red flag as well.
I don't want to kill the deal, the numbers are still great. SO, I have to do my best to estimate repair costs, lean on my property manager, contractors, and my own research.
Because I require another specialist to get out to the property to evaluate the crawlspace, I immediately ask for an inspection period extension. This is usually built into the initial contract, so make sure when getting a property under contract it's in there, unless you really feel like you won't need it!
Meanwhile, I also had my agent go out there and TAKE PHOTOS AND VIDEOS!
Make sure in addition to your inspector seeing the property, you arrange to have your agent and/or your property manager check out everything. Getting their impression of the place is SO valuable.
NEXT STEPS: I need to determine repair costs and then come up with an inspection response back to the seller. I still plan to move forward with this property!
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