As a real estate investor, you are always on the hunt for the best possible deal and opportunity to grow both your portfolio and your income. In many cases, this means keeping your eyes peeled for any potential costs to cut. For this reason, many real estate investors question the value or worth of having a home inspection performed on a potential investment property. In today’s post, we will examine multiple perspectives to help you determine whether getting a home inspection report on your next Des Moines investment property is a good idea.
How Are You Planning To Finance Your Investment?
First and foremost, we need to establish your plans for financing this property. If you are like most newbie real estate investors, you will be obtaining some level of financing, like a mortgage, in order to purchase the property. If this is the case, you actually won’t have the luxury of opting out of the home inspection. This is because the bank providing your loan wants to ensure that they are making a wise investment by agreeing to provide your mortgage. However, if you plan to purchase your investment property with cash, the ball will still lie in your court which is why you must consider the following.
What Previous Experience Do You Have?
If you are new to real estate investing, then it is generally always a good idea to have a potential property inspected. One exception to this rule is if the seller has already had the property inspected and appraised and can provide you with those reports. However, if you and your partners have years or decades of experience in rehabbing properties and construction and are confident in your ability to identify or assess potential problems like foundation issues, plumbing or electrical defects, or a roof that will need replacing in the near future, it may not be as necessary to order an inspection.
The Risks Vs. Rewards
Just like with any type of investment, you need to measure your risks against your potential rewards. In the case of having a home inspection performed, the reward generally outweighs the risk. In other words, spending a couple of hundred dollars for peace of mind that the property is in tiptop shape and up to code could save you tens of thousands of dollars down the line.
Since most of the time a wise real estate investment dictates that you will be buying a property that is in less than perfect condition in hopes of maximizing your potential profits, a home inspection is a sensible expense. Not only can it provide you with peace of mind, but it can give you additional negotiation leverage if substantial defects are identified in the report. As a real estate agent that specializes in working with real estate investors, it is very rare that I would ever endorse the decision to skip an inspection report.
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Liz and Chase