Welcome to another episode of Passive Real Estate Investing. I’m your host, Marco Santarelli. And I am glad to have you back. You know, this topic of home inspections should not be a boring one. I know on the surface, it might appear that way, but you need to know as much as you can about home inspections. Clearly, I think it’s obvious that the importance of a home inspection does not need to be stated. In fact, we have a policy that all the, uh, clients, all of the investors that we talk to and work with must order a home inspection when they’re purchasing investment property, regardless of what it is, including new construction. But you know, a lot of people misunderstand what an inspection is supposed to contain, what it should cover and should not cover. What is the breadth or scope of that inspection? How do you even find a good home inspector?
Well, these are all good questions and I’ve jotted down many others that we’re going to ask and discuss with my guest today, who will be on here in half a minute, but you know, just real quick here, you know, why should you get a home inspection? Well, there’s many reasons off the top of my head. It, you know, if you’re doing due diligence on property and you need to make sure that you are not getting yourself into trouble or purchasing a lemon, it essentially provides you an out. There’s always a contingency in every purchase agreement. It’s a due diligence period. And within that due diligence period, you can order an inspection. And if it doesn’t come back to your satisfaction, which is not a quantifiable description, it’s more qualitative than quantitative, but it gives you an out to get out of that contract, get out from under it and just have your deposit returned if you have a deposit on it.
So it gives you a contractually legal way to get out of a contract. So there’s that, of course, safety reasons. You wanna make sure that you don’t have issues at the property like raydon or mold or carbon monoxide. So, you know, you wanna make sure that there are no safety issues. In addition to that, it may be able to point out if there are any illegally built additions or installations to the property. Maybe there was something that was built, some sort of extension or addition room that does not fall under code, or maybe there was never a permit issued for it. So you should be aware of that as a side, the, uh, seller should and is supposed to disclose that information to you. But you know, that’s another thing is just to reveal any illegal additions. It’s a negotiating tool. I mean, if there are issues that need to be solved or cured, it allows you to negotiate and bargain either a credit or a reduction in the price, or just have the seller cure those issues that are red flags or must be done items.
It gives you the ability to forecast future costs. If you have an idea of the wear and tear of various things in the property, then you can forecast what some of your renovations or capital expenditures might be in the future. So it’s good to know what the shelf life is of various component in the property. That inspection could be the deal breaker type of document that you need to say, well, no, this is just too much to fix. I don’t want to credit on anything. So, you know, it’s just a no go. Deal’s not gonna break now. We never have that situation. I shouldn’t say never, probably one out of every 300 properties has an in come back and the report is essentially a deal-breaker. There’s just too much there to wrap your head around. But like I said, it’s, it’s very rare that that actually comes up.
So other than that, you know, the final thing, but this is certainly not the last thing. Uh, but the final thing that I wanna mention here is insurance. I mean, no insurance company, will I a property if there are various issues there. So it’s basically like a clean bill of health. And, uh, as long as the, uh, inspection passes through your criteria and the insurance company’s criteria, they’re not gonna have a problem issuing property insurance or hazard insurance on the property. And keep in mind, they’re not looking for the condition per se, as much as seeing if there are certain conditions that are found at that property, for example, the presence of certain types of mold or the lack of a certification for wind mitigation. And so this is obviously gonna be state specific, but those are some of the things that might be issues for insurance companies to issue hazard insurance on your property.
So there’s many reasons to have a property inspection done. So it’s not just for your protection and for you to know what you’re getting into or what you’re acquiring.
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So with that, let us get to our guests, actually two guests today and talk about inspections and what they are and what you need to know about them and how to pick an inspector, et cetera, et cetera. It’s my pleasure to welcome two guys to the show. First, one of our investment counselors, Nate Hall is here. Nate, welcome back.
Thank you, Marco.
And kind of a special guest, if you will, Mark Rojek. And he is the owner of Rojek Home Services in the Chicago area. So he services the Chicago land market and Mark, welcome to the show. This is your first time. It is thanks for having Marco. Well, it’s great to have you on, we have an interesting topic today. It’s about inspections and I don’t know what I’m gonna call this podcast episode yet, but, uh, let’s start off with you basically introducing yourself. Why don’t you tell our audience a little bit about yourself and your company and you know, the services you provide. So that way we can have a little context into this, uh, conversation about home inspections.
All right, thanks. My name is Mark Rojek with Rojek Home Services. I am an Illinois state licensed home inspector. I’ve been doing this for other people for about five years now, but altogether in the industry for about 20 years. Um, I’ve done all aspects of commercial, residential from builds, build outs to all the different types of inspection that are involved. Um, I primarily focus on residential real estate right now, as well as working with a few of the large banks and renovation lenders to do investor type inspections for lending that they do as well as verifying work. That’s gonna be done for purchases of some of these distressed properties, just making sure that the budgets and the ambitions and dreams of some of these clients are realistic with the condition of the house as it sits.
Good stuff, Mark. So, you know, I, I don’t want people to think that this topic is boring. I mean, I’m sure it’s not exciting to a lot of people cuz we’re talking about home or property inspections, but the reality is it is important and it’s part of everybody’s due diligence. In fact, you know, Nate will tell you as well that we kind of have an internal policy or a rule here that we won’t work with any clients that don’t actually order home inspections on the investment properties that they purchase. We can’t force anybody to do it, but we that they get a home inspection, even if it’s new construction. And you would think that a new construction property probably doesn’t need a home inspection because it’s brand new, there’s nowhere and tear and you know, no one’s ever lived in it. But the reality is it’s, it’s an important part of everybody’s due diligence and you should always have a home inspection and the cost is not very high either.
You know, it think of it almost like an insurance policy. You’re having someone inspect a property from top to bottom to make sure that everything is in order. And that’s basically what I think I’d like to unpack with the two of you guys here today, both Nate and I coming at it from an investor’s perspective and maybe two slightly different perspectives. Nate being on the front line, talking to investors all the time, you know, he gets a lot feedback and questions about it and, and I’m sure, you know, he reviews these inspections and reports with a lot of people, but I’m thinking maybe the best place to start. And Nate, you can jump in anytime you’d like, but kind of, I like to work from the general to the more specific, but when it comes to looking for choosing an inspector or an inspection company, what do you guys have to say or suggest or recommend in terms of finding an inspector, someone who is qualified and reliable. And then we’ll kind of take that one step further and maybe ask, you know, is there a checklist of items that you want to see or have in that search in finding an inspector? So I’ll throw it to of you guys. And we’ll just start there.
As far as for me, the tops things that I’m gonna be looking for when looking for an inspector, cuz I’ve bought properties that I’ve used other inspectors for just because I didn’t want the bias of myself going in there and looking at things, uh, with an unfair eye towards what would be in a perfect world versus what is realistic for that transaction. It’s going to be honestly, review services, Google, Yelp, uh, Zillow. I wanna know have other people used these inspectors and have they had good feedback and not just, you know, five star reviews, five star reviews are, but if there’s no words associating with it, there’s obviously services you can pay to do things like that for you. So that’s a good jumping off point and then getting a sample report, get a copy of a sample report. So, you know, is it something that you’ll even be able to decipher because if it comes across and it’s basically a disorganized mess or in a foreign language, it doesn’t do you any good as the hire to understand any part of what’s going on with that house. And there’s a very high probability of you missing something important.
Yeah. I want to come back to the, the report thing in a few minutes here, because I actually have a very specific question about that. Aside from Nate having any, you know, comment on this, I’m curious about something. I mean, before the internet, how would someone go about doing their due diligence when Yelp didn’t exist or you know, Google reviews or anything else for that matter? I mean, where would you turn to, would you talk to references? I don’t know if I put a lot of weight in references either because I would think that there isn’t a company out there that’s gonna provide you references that aren’t glowing. Right?
Correct. It’s funny that you know how much the internet has changed. Even as you mentioned for report writing has made a gigantic difference, but for references, you really would call, you know, you know, somebody that’s a realtor, you’d call them and say, Hey, who do you use? But that’s not telling you anything about, that’s not giving you a guarantee of the quality of work that’s actually gonna get done because there’s several realtors that I work with that I don’t do their regular clients inspections. I only do their family and friends because they don’t want to deal with a report that comes up with too many things. They’d rather use a different inspector that isn’t going to find as much as gonna make their job harder. Now, morally ethically, that’s their issue to deal with. I just do the inspections that I’m given. I treat every house exactly the same because I don’t know what’s important to my client. I’d rather give them all the information, let them sort it out, ask questions as they have ’em and do my best to help educate them on the property.
Okay. So if I was looking for an inspector or an inspection company and I’m a new client, I’m a new investor. What would that so-called checklist be of items or things that I would need or wanna look for in making my selection?
As far as for a good inspector right now, they’re gonna be utilizing one of the major software. So you’re gonna look at home. Gauge is, is good, uh, spec to there’s tap inspectors. Okay. Um, there’s a few different other one that are out there. I use Spector. I feel like it’s the most user friendly, the easiest way to develop a picture that clearly helps the client understand what’s important versus what isn’t not that it’s not important, but it’s not an, a one priority. And then also details where are these problems? Because just a broad statement saying house needs ground fault, protected outlets. Okay, that’s fine. But identifying what areas, what rooms, where do these things need to go? So you can develop a game plan for, is this something that I need 30 outlets for, or I need to two outlets. Is this a simple job? Is this a long job? Because especially when it comes to credits repairs, things like that, you gotta be able to budget. If you’re spending X of our dollars on this house, how much is the process gonna take to get it up to livable and up to what you’re looking for?
What about things like licensing is licensing? I, is it critical? What kind of license? And this might actually change state by state because if I am not mistaken, I believe there are some states that don’t require a license for home inspection. I’m not sure about that.
That’s correct. So there’s, I don’t know the exact count. Uh, I’m an Illinois, Illinois is a licensed state. I mean it does require taking a state test that as of January 1st, just got significantly harder to do. It’s requiring a little bit more skills and verification of those skills in order to get that license, as well as there’s also international associations, such as InterNACHI, which is the International Association of Certified Home Inspectors. That type of group. When you see you that seal on a website or on a business card, they at a bare minimum verify that the inspectors doing 24 hours of validated continuing education every year. So they’re making sure that this inspector didn’t get licensed in 1984 and has never done any sort of updated education since. So those type of things are important as well, that license, it, it is important. Someone is verifying that that inspector is knowledgeable, understands the subject matter at at least at a basic level and is insured because an inspector is a human being.
No, one’s perfect. A hundred percent of the time. It’s impossible, making sure that they have the means via insurance or other bonds or things, depending on your state in order to cover, if something does happen, if they damage something during the inspection, if something was overlooked that was required to be reported on by your state, SOP, those are very important things. A fly-by-night non-licensed operator who, you know, has been, as they say, a in construction, uh, for a lot of years, which may have been a painter may have been a drywaller or may have been a licensed electrician. You don’t know it just, the license takes that guessing game out of it a little bit, knowing that at least somebody has looked into their background.
Okay. So we’re talking about licensing specific to home inspector and we’re talking about ratings and reviews and we’re talking about length or time in business as an inspector, we are talking about possibly even looking at references or reviewing references that are provided. Okay. So that’s a pretty good checklist. I would think that for most people that’s enough. I don’t know what you could do beyond that. So is there anything else you want to add to that? I think that’s probably as comprehensive as you can get with inspectors.
No, I think that’s about you’re right. I think that beyond that in checking with their dental records, I don’t think you have much else there.
It’s right. okay. All right.
Um, yeah. And if Marco, I can chime in here for just a second, you know, depending on where you’re investing, right? Whether it’s in Illinois or it’s Tennessee, or, you know, if you’re investing in Kansas City, every partner that we have, right. Every broker partner that we have, you know, step one, bring investors, they can certainly point you in the name of a reputable company. So you can, you can, yes. You can go on Google. Yes. You can do all the things that the internet is designed is wonderful to do. The partners that we have, who have been in the markets for 15, 20 years can tell you a reputable company versus an unreputable company for inspections. So if you know, if you’re buying a piece of real estate and you’re working with me and we’re investing somewhere, you know, my first step is always who does our partner recommend? And again, inspector is typically not gonna be biased, right? They’re gonna be, you know, working for you as the buyer. That’s a good place to start as well on top of your own search on Google or Yelp or whatever that might.
Be. Yeah, no, I agree. So let’s kind of dive into more of the tactical stuff here in terms of inspection reports. One thing I’ve noticed across the board, like meaning from market to market inspector to inspector is they rarely look the same. You know, they are so different. There’s no standardized template or model to lake. There is in the lending world where you have, you know, a HUD statement or a settlement statement or whatever, you know, there are documents that have been standardized and they all look the same. The information changes, the data changes, but, but you know exactly what to look for and where to find it. But I haven’t seen that in the world of inspections. And so, I mean, what is a good or a bad inspection format or model? What should our expectations be? I guess let’s just start with that. Because I think before we get into the nuts and bolts of what’s in the inspection, I’d like to kind of understand the inspection report a little better.
I think with any inspection report of this, of this style, because it is hard to standardize from market to market because there’s things that are important in coastal areas that are not in, you know, the middle of Arizona and things that are important in the Midwest that are not in Florida. So different market specific ideas of the layout is going to happen. But most inspectors, it seems at least all the reports that I’ve read, which I do read quite a bit, just trying to keep up and keep my template where it needs to be typically in the beginning, we’ll explain either through a video link or some sort of written legend to explain, Hey, here’s what this report is for. Here’s what it explains. Here’s what it doesn’t explain. So there’s gonna be exclusions. You know, it’s not technically exhaustive, we’re not peeling the drywall off and looking behind everything. There is no way to get behind certain areas and setting that expectation right off the bat is important. Um, but here’s the things we are gonna look at, you know, struck. Sure. We’re gonna look at the roofing. We’re gonna look at all these different sections and clearly label them. So you have a good understanding of what that report is and what it isn’t.
I think one of the things that I’ve noticed as well is that you’ll never have a completely comprehensive inspection. You know, an inspector can spend or hours even a full day at a property and check a lot of things from, you know, from the foundation all the way up to the roof. But you know, it becomes impractical at some point, as far as how much you can actually check and inspect. So what is reasonable or what should be the expectation of what is covered in, a typical property or home inspection report?
My general thought process on that is if it’s accessible and visible without doing some sort of damage, it should be in that report. It’s not a hundred percent perfect where it needs to be. So that being said, we’re not gonna, we’re not gonna document every single Nick or in the drywall or a little spot of interior peeling paint, unless it’s a potential for a lead base issue. That’s gonna be documented that, Hey, this is an older home. The potential’s there for a lead paint. We may wanna make sure we, we focus on these areas, but anything that’s accessible, which accessible a, a tough term. There’s a lot of things that can be barriers to accessibility, such as weather, depending on, on what the weather conditions are accessing a roof, you know, in January and Chicago is potentially detrimental. It’s gonna be hard to do, but there’s different tools.
You can use nothing, beats the eyes and hands actually getting on that roof and looking at it, in my opinion, a drone, a pole camera, those things are nice tools, but they don’t beat that. But sometimes you just can’t get to it. Another issue, especially with a investment properties is tenant belongings. So if there’s a high amount of belongings piled up in different areas, such as blocking the attic access, blocking the flooring in different rooms, that does put a hindrance on my ability to report on all the details. But those type of things are where, you know, documenting them in the report saying, Hey, we didn’t get a look at this area, but because of X, Y, or Z is very important. So it gives the client the ability to decide which direction they want to go. You know, do they want to request the seller? Hey, can you have them clean out this room? Because sometimes tenants are present. Sometimes they’re not, sometimes they’re cooperative to pull that stuff out. Sometimes they’re not in the same for a regular residential transaction. We don’t always have access to everything based on your furniture, your lifestyle. And that just it’s the reality of the situation. Not every house is vacant.
Yeah. That makes a lot of sense. Okay. So maybe let’s kind of dive into your model. I have a follow-up question to that, but I think it is probably more appropriate if we, we talk about the different categorizations as you have them. And I like how you’ve categorized, what you look at and inspect in terms of safety items, structural items, and service call related items. I really like how you’ve broken this down. Uh, so I’m not gonna steal any of your thunder. Don’t you go over each of those three, maybe describe or, or define what those are. And then let’s kind of dive into some examples or what they might cover.
Sure. So my primary report is going to be thorough. It’s gonna cover everything. The typical sections you would wanna know about the house, you know, roofing the grounds, the exterior heating, cooling plumbing, the typical things. But for me, and what I try to explain to my clients is, especially with an investor client that, you know, an investor, client’s not as concerned with a small Nick in the drywall or a missing door stop or things like that. But they are concerned with what I call my three hot button issues, which is safety, structural and service calls. As you mentioned, those are areas where you want to address them in a priority fashion. So, you know, safety things, you know, ground fault protection, handrails signs of mold, things like that. Structural is OB pretty obvious from there. If the house is leaning one, why is it leaning?
And two, how do we stop it from getting worse? Because those are big ticket items. And those are big dollar figures in order to fix that underpinning, you know, it could be 20 to $30,000 for one section of wall. So that’s a big hit in your budget. And then service calls, service calls seem stupid and people laugh when I point ’em out, but little things turn to big things, and it is much easier to do a service call type of repair prior to closing or at closing bundle. ’em all the together than to get killed throughout the year for, you know, service calls from your management company or from your contractors going out there for, okay, a wobbling toilet. And then you got potential for leaks and mold, and then old leaks that are now starting to leak again, damage doors where people have to yank on ’em, that’s gonna break the doors. It’s gonna cause more service calls, and it’s just gonna eat away at your net profit.
That’s a big point that you’re bringing up because even an item that is inexpensive, it could be a $10 gasket or, you know, an S trap or whatever, a wax ring on a toilet. I mean, these are low cost items, but the fact that there’s a disruption to the tenant, there’s possibly an interruption with a phone call or an email to you, the property manager, having to dispatch, you know, one of their maintenance people and then, you know, billing you for that, uh, repair plus, you know, the extra 10% or 15%, whatever they charge for that service call starts to add up. If you have multiple items like that over the course of a so dealing with all those service call items upfront, just batching them and knocking them out from the beginning will save time and money and possibly a little bit of aggravation for everybody over time. So I think that’s huge. And most people don’t even talk about that kind of stuff.
You don’t realize when you, you listen to some of the management companies explain how their, their services work, but even the individual investor taking time outta your day to go and deal with a, you know, leaking wax ring that could have been corrected when somebody was out there doing the turn, you could have fixed the wax ring and a few other items to avoid a, having to go back in there. Because as you mentioned, trying to coordinate the tenant schedule, the contractor’s schedule, trying to get everybody in there, and God forbid they don’t have the right parts or need to come back for a second call. This just adds up and adds up and it gets expensive very quickly for what, like you said, a wax ring, a wax ring’s less than $10, you know, and then an hour of labor and that can have avoid further problems. But once that is leaking, especially if you have a crawl space that no one’s going into beneath it, you don’t know what’s leaking down there and you don’t know the issues that are forming because of that. That can cause significantly bigger things down the road for you.
So I don’t know if you can answer this question, but maybe Nate has some comments on this when that inspection report comes back and you have, you know, various things in there. Often the majority of them are minor things. However you want to define minor, but they’re not necessarily major things like structural foundation related roof or whatnot. How are those typically dealt with between the perspective buyer slash investor and the a homeowner? Is there kind of a, I’ll call it best practices, but really just a way to handle or an expectation of who should be responsible for curing what in that inspection report, if it’s something that even needs to be cured?
Yeah. I’ll chime in here on that, Marco. So it’s a great question. I think for most clients that I work with, I think what a good inspection does is, does give you some wiggle room for going back to the seller and, you know, doing some negotiation where let’s say that, you know, there are some things on there that may cost a thousand dollars or $2,000. You know, most of the time that’s gonna be handled by the seller or there’s some wiggle room for maybe a, um, you know, a credit at, at close. But I love what Marcus said. If there let’s say there is 500 or a thousand dollars worth of, you know, service work that needs to be done on the property by all means I would handle that upfront to negate any issues that, that first year of that hold. So again, to circle back around, if there what I call red flag issues, that’s what I call it. There’s not like an industry term, but a red flag issue is let’s say there’s like a major mechanical that needs to be looked at or something like that. I absolutely will work with my client and go back to the seller and see what we can work out in terms of getting something majorly repaired prior to close.
I kinda laugh because, you know, investor clients and, and market clients are a little bit different, but I try to explain based on what needs to be repaired, whether you, in my personal opinion, I would be, and this is more of an attorney and an agent question, but when people ask me directly my opinion on it, if the item has any latitude in how the repair can be done, I usually if possible, try to get a reasonable credit only because in my experience and not say anything bad about these sellers, they’re not looking to put any extra money into a house that they’re getting rid of. I understand that I’d be in the same position, but I have seen, you know, after these negotiations get a little bit tense, I have seen people fix a handrail in a $600,000 house with a length of two by four, that they put up on the wall in this beautiful home, because it’s inch and a half it’s graspable, it meets the standard.
It technically covers it, but it’s not anything anybody would’ve ever put in their own house. They were just upset about how the negotiations went. They didn’t want to give those things in. So I, when there’s latitude about how you can repair things, you know, maybe not matching the flooring perfectly when they have to match a, a broken tile or things like that. Those are the things that I’m a little more cognizant. If you have the ability, the manpower, or the ability yourself to do the repair, I would try to take the credit for it, cuz you may be able to do it cheaper and you’re gonna do it a way that makes you happy. Whereas if the furnace didn’t work, it’s cut and dry. You have a license HVAC contractor, they’re gonna either make it work or replace it in a licensed fashion. Their license and insurance is on it. Same thing with most electrical issues. You’re gonna have a licensed contractor doing it. It’s either correct. Or it’s not there. There’s no wiggle room in that. So those things are things that I more look for the them to do and get those repaired for you.
So you’re suggesting take a credit and just have someone do the work for you and take the responsibility for it rather than having the seller do whatever they might want to do. Right?
It’s based, dependent on what the thing is. Like I said, if there’s, if it’s an, a correct or not correct issues. So, you know, the furnace does not turn on. Okay. And you require that a licensed heating contractor comes in there to repair it and a licensed heating contractor signs off and says, yes, it’s repaired. It’s repaired in a way that I’m comfortable putting my name on. And here’s a copy of the invoice saying that I paid this professional, do it sure. But if there’s some more minor things that are more of a nuisance, um, latitude for the seller to do their own type of repair, that might not be up to the standards you’re looking for or that you want for your tenants. So they take pride in your property and take care of your property better personally, for me. And this is more of the attorney and you’re gonna help you with it. But personally, for me, in my experience with my own rentals, if you have the, know-how just take it for yourself. Now don’t end up getting screwed by your contractors. You don’t want to be subbing everything out, but if you have the ability and you have a general understanding of what it’s gonna cost, that’s probably the direction I would want to go when I have the option.
Got it. So I taking this one step further, your safety, structural and service call items are categorical. And they’re great. I like how you’ve divided that up. When I look at things individually on a on inspection report, this is something I’ve talked about for years. And I would assume that our investment counselors here have adopted this to some degree, but I’ve said many times that I like to look at every item that is brought to my attention in an inspection report and label them as either must be done, should be done or could be done because the reality is there’s always gonna be stuff in an inspection report, even in a home that you would consider to be in perfect condition. I’m gonna be certainly concerned about things that must be done, I mean, those are call ’em red flags if you will. But those are the first things I look at. And those are the things that must be addressed. Then there’s potentially a list of things that should be done, which will not affect the lifespan or the performance of the property or the rentability. But they’re things that would be nice to have done improve the property, but it’s not a red flag, urgent type of item, but they still should be done. I mean, looking at it from, you know, is this a reasonable request? It should be done. And then everything else, you know, call them ticky tacky items are the things that could be done, a crack in the wall that needs to just have some repainting or loose to or knob, whatever it may be. So, Mark, what do you think of that model that I have of breaking things down is must be done, should be done, could be done.
Marco your spot on. Basically for the way my reports are the way mine are done, the way a lot of people that utilize similar softwares are done. And Nate’s seen this before I break it down. My reports, uh, the full report is broken into three categories, which is like you said, must be done, which is my defect slash safety concern, which are obvious safety issues, big ticket items, things that, Hey, this is, you know, structural concerns. Hey, we gotta, you gotta get a look at this, cuz this is a potential for a big problem. So those, I label those red, those are, Hey, a one priority. You may not fix ’em, but you gotta know this is what’s going on and it’s not functioning correctly. Recommendations is my other category, which just should be done. These are things that, you know, whether you do it or the seller does, there are things that you want to take care of before they turn into a bigger problem.
Um, they may not seem like a big deal, but there’s a reason I put them on that list. That’s the most, the biggest category my bread and butter is gonna be in recomme. Those are gonna be areas that you may not realize are gonna turn into a bigger problem. And it’s my job to make sure you know, these aren’t the glaring, Hey, uh, the garage door’s falling off the track. I could see it laying half on top of the car. These are things that you may not think about as a standard consumer that I’m there to make sure you understand. And then the maintenance or FYI items, which is your could be done. Those are the blue items that I, I, I categorize as small things that in my opinion should still probably be taken care of because the house isn’t a hundred percent perfect, but you could do ’em at your convenience or choose to never do ’em no one’s gonna arrest you if you don’t fix ’em.
But you know, it might seem ticky tacky sometimes, but you know, missing door stops. It seems so imple. But once those door stops are missing and someone puts a door handle through the drywall. Now you gotta fist size hole. Then you gotta pay somebody to patch, to paint, to do different things. Those are repairs that turn into bigger problems. So I still label ’em blue, but I make sure, Hey, just keep those in mind. If you’re there, you’re coming to do a air filter change. You’re coming to talk to the tenant about something. You can knock out a couple of those repairs in a few minutes of basic hand tools and basic knowledge and prevent something where it does result in a service call.
So the missing door stop is according to what you’re saying, but according to me should be done item or maybe a must be done item, where do they fall under your categorization of safety, structural or service call? Is that a service call item?
That’s more of a service call. Yeah, that’s a maintenance or FYI item. It’s a basic item. It’s, it’s small. I get it. And a lot of people laugh about me putting just I put a general statement that are, if you’re missing multiple door stops, I just put a general statement in there, you know, pay attention, these little things, because again, what could be fixed with a single phillips head screw in about five minutes, a time yields, a bigger problem when somebody puts a door handle through the drywall and you’ve gotta pay somebody to stand there while they watch spec dry and then paint in order to make it get back to a condition that you want to have it in.
Okay. So sometimes there are things that come up in an inspection report that are beyond your core competency or, you know, the scope of work of what the inspection report is about or for at what point should your client or the buyer call in a new professional or expert to do an, of some other kind to essentially compliment or add to what you are doing with the, I don’t know if I should call it a general home inspection, but whatever, you know, inspection is being done by you.
I love when, uh, I come across things that I just, no matter how many times I’ve done these and I do a, a fair number of inspections per year, there’s always going to be things that I come across that the homeowner does or a unprepared contractor does. And you just stare at it. You try to figure out I get what you are trying to do, but why, why did you do it this way? And there’s always gonna be updates into technology and changes and things. But if there’s something that’s that far out of the scope of understanding for me of why this thing is this way, or what is it gonna cost to get it back to the way it should be? My inspection will always document and request that it be evaluated by a, you know, licensed electrician, licensed plumber, licensed structural foundation expert, things like that.
I document those things in there and recommend further evaluation of that specific item. Because even no matter how much you try to keep up, there’s always new products on the market. There’s always new installation guides. There’s all these different things. A smartphone is a tremendous help versus what it was like for an inspector 20 years ago, to be able to quickly look at an instant guide for a specific furnace or a specific appliance or whatever, but there is no beating a technical expert in that area. And I’m not ashamed to say that if I come across something and it just does not make sense, I’m absolutely gonna refer it out to somebody else and tell you, Hey, you need to talk to electrician about this. This is not the way it should be look into it. It might be the way it could be, but I would want a person that has extensive experience just working on map. Specific thing to tell you definitively that this isn’t gonna be a problem.
Okay. So my next question, probably one of my last question is here is really just about age and what might be acceptable. So when I refer to mechanicals of a property, I, I basically break everything down in my mind as either their mechanical or it’s cosmetic. And when I talk about mechanicals, I’m talking about the hot water tank, HVAC system, anything that all else that might be technically and specifically mechanical and the roof, I just kind of lump that all together, roof and mechanicals, and then everything else I just refer to as cosmetic, because they’re typically pretty easy to replace or repair, but when you’re determining age of the roof and other mechanical items, is there a minimum accept lifespan? And I know this might probably change from person to person. It, it might be subjective to some degree, but if I probably talk to different inspectors, they might say, well, you know, what’s acceptable is different. And that may be true with the, the client as well. The investor, they might be saying, well, a 10-year lifespan on a roof is acceptable. Whereas someone else might say it has to be 15 and someone else might say five. So I don’t know if there’s a right answer to this question, but what would you say about age and what’s acceptable?
So it’s really up to the individual, but the way I report it is this the way I talk to my clients about it is typically for me furnaces and heating components that are inside the house, typically going with anticipate about 25 years out of them. Now, some get more, some get less, but it’s a good indication of being able to budget for your capital improvement plan. It’s about 25 years. It depends on the cleanliness of the individual that lives there, different factors, but that’s a good round number for exterior heating and cooling components, such as condensers and heat exchangers, things like that. Or, uh, I’m sorry, heat pumps. You may want to think more towards that 20-year range, especially in this area of the country. We have extreme temperature swings, you know, one day it’s 50 degrees and next day it’s negative five. And that just beats up the components on the exterior of the house, sun exposure, things like that are going to wear those components quicker.
And then water heaters, typically on the high side, you’re gonna get about 15 years now, not to say there’s not exceptions to the rules. I’ve seen. ’em still functioning from the mid eighties on well water, but that doesn’t mean they’re functioning well, and it’s not typical. So, you know, you start budgeting around year 15. You gotta, you can’t be surprised that it goes out. That’s gonna be realistic for the roofs. Roofs are tricky because again, weather plays a huge factor in it, amount of sunlight. So is there a lot of foliage around there? Is it covered? Does it have an opportunity to dry all the way? There’s a lot of factors there, but typically what I’m looking for is being able to tell my clients at a minimum, can you get at least five more years out of this, a three tab roof, which you’re not seeing many being installed anymore.
Typically in this area of the country, you’re realistically getting about 15 to 18 years out of ’em. And then when you go to an architectural, single 25 to 28 years is about where you’re gonna be at, even though they have a 40 and 50 year lifetime warranties that they put on that that’s not, if you read the, the terms of that warranty, it’s not all it’s cracked up to be. So it doesn’t mean that at year, you know, on a 40-year roof at year 39, you can’t call up and Owens Corning or anybody else is gonna come out and give you a brand new roof. So having that realistic understanding of it based on the conditions that I see are gonna be helpful, determine that.
This is kind of a tangent question, but I never thought about it until I just heard you mention warranty. Are those home warranties worth purchasing to a large degree? I just see them as a rip off, but is there any value in those things?
It really depends on the individual company. I do put a five year roof leak warranty on anything that I inspect that comes with the inspection. There is no extra charge for it, as well as a 90 day warranty on all the things that I was supposed to inspect that it doesn’t mean that if I tell you you’ve got a problem, you know, a leak with your water heater, you can’t call in on day three after you close and say, you need a new water heater, cuz they’re gonna ask to see the inspection report. Um, I have had clients ask for things like that. There are some warranty companies that are better than others. Some that have, you know, a one page size, 12 font. Here’s the terms, here’s what it is. And there’s other ones that have 50 page size, eight booklet of all the reasons why they’re not gonna cover what you’re looking for.
So you need to do your due diligence. If you’re going to be looking into one of these warranty programs and you have specific things in mind that you’ve seen on this house, that aren’t looking that great to you make sure it’s covered before you spend that money cuz otherwise you’re right. You are just flushing it down the toilet, not only the cost of that, the warranty, but then you have to pay for that service call typically about a hundred bucks for them to come out and then tell you that, yeah, no, this isn’t gonna be covered by your warranty. But as long as we’re here, we’re willing to do it. And in my experience, several of those contractors are not paid white is great or have to give a cut to the warranty company. So if they do offer you services, which you’re kind of obligated at that point to try to utilize, just to get it done quickly, they’re typical. You had a pretty high price compared to finding a contractor on your own and getting somebody local to do that repair.
Okay. Possibly my last question that I can think of at the moment is this, how often do you have investors or clients send you back to the property? The inspection is done and there has been a list of items that are being repaired or cured. So once that stuff is supposedly done, fixed, cured, whatever they have you go back and just verify that those items have been done.
Typically a reinspection is pretty rare. It does happen sometimes for the out-of-state investors that are buying in this market just because they don’t have eyes on the property, but most of them are relying on their agent to representative and their attorney to obtain either a visual verification that the work was done maybe on their final walkthrough and or invoices from licensed contractors to show that, Hey, this was completed at this location. And then they do kind of a follow up on their final walkthrough. But typically it’s a very small percentage that send me back for reinspection and it’s mostly out of state or, or people that just have zero technical skills. As far as understanding, was this repair done correctly?
What would your recommendation be for someone who is purchasing an investment property out of state, would you recommend that they have you go back or just their, some other representative let’s just call it that?
It really depends on the repairs that they were. If they’re, you know, simple things of that, a normal person can go in and see such as, you know, blown window seals or you know, a door doesn’t open or things that they can observe without technical skills, just have the person that’s doing your final walkthrough for you. Just verify those items we’re taken care of and they can do the check sheet. It’s gonna save you money. And that shouldn’t be a big deal. But if it’s an item, especially things that are inside of an electrical panel or things that are up inside the attic, that a typical, person’s not going to be able to access and verify. And if you have not received photographic and invoice documentation from the seller and their contractors, I would definitely recommend because it’s not beyond the realm of possibility that somebody tells you that they did a repair. And even if they meant to do it, they may have told their contractor to do it. Things do occasionally get overlooked. And the last thing you wanna do is try to track that person down after you’ve already given ’em your money and closed on the property to try to get them to do something about it.
Right. Good stuff. So I’ll throw this out to both of you guys. What is, should I have asked you that I didn’t, uh, are there any other questions that we didn’t cover that we should bring up now
Real quick on my end? Uh, I want to circle back around real quick, like on cap it capital expansion items and Mark, just get your pain on this. I, I may have missed this for some reason, electrical panel, you know, electrical I and plumbing. How often are you doing, you know, scopes or hiring? So you have to do a scope for investors. And in terms of age, we were talking about age, uh, roofs and age of HVACs and things like that. Is there a particular age you look at for a panel or plumbing, plumbing pipes?
Typically in this area, at least our primary new construction. And there are some variables in different areas, but our primary new construction waste pipe is gonna be PVC. So you don’t have a whole lot of life expectancy issues with that older homes in the city proper. And some of the older areas are gonna be cast iron. Those are gonna be things you wanna make sure you look at areas with mature trees. You could be at a point I’ve had several properties that I’ve had annual service contracts to have the main sewer line rotted out. Because again, that service call thing, if I can, pre-plan somebody going in there with a four-inch cutter head to run through that sewer line to make sure I don’t have problems. It prevents that Thanksgiving morning, toilet back up, flooding out their house, damaging the flooring and all their belongings and me having to, to deal with that service call and those issues, um, over something that’s preventable, as far as the electrical panels and things like that.
It really depends on the technology. Typically the 30, 40, 50 year old panel, you’re gonna wanna look at it doesn’t mean you have to change it out. It just, you wanna look at that technology. There’s several brands of panels that have developed problems over time that I would identify on that initial inspection report that, Hey, this is a problematic panel. There’s varying opinions on it. It’s not illegal, but you’re gonna wanna look at this as potentially a service call or a problem in the future. That again, if you lose a phase or you have a problem where half the panel shorts out, or you have an issue with it, getting an electrician to come out there at, you know, midnight on a January night to get that heat running again in the house and get things functioning is gonna be significantly more expensive than avoiding those problems early, getting the those taken care of.
But the only other thing that I really focus on with the plumbing, I guess, would be the supply lines for galvanized plumbing. Galvanized is common in the older areas of the city here and the older suburbs. And the problem with that is that it builds with corrosion. It gets smaller and smaller over the years and you should always anticipate at some point, you’re gonna end up having to replace it with copper or with some areas of going with packs and some other products. But those are things that are going to yield low water flows on that inspection that we’re gonna see right away. It doesn’t mean it’s not gonna continue to build. And it is something like you talked about at capital expenditure. You should plan on in the future. Galvanized is not going to last forever as far as being a acceptable water supply product. So you want to budget at some point either you’re gonna have to do sections of it or you’re gonna have to do repairs. But typically when you do a section, you usually end up loosening a different area. So normally once you get a plumber in there, if he’s already there with a copper, a typical, you know, three, one and a half or three, two bedroom through two house, you’re gonna want to probably get as much of it switched out out as you can to avoid those problems.
Can the same be said.
Got it. Thank you.
Sorry go ahead Nate.
Nope. I was just saying thank you for the answers.
So, uh, that was plumbing. Can the same be said for electrical wiring rather than copper, the old, what is it called? Cap, uh, cap and tubing or something like that, the very old electrical system?
Well, old knob and tube wiring is not insurable for most major companies and a lot. I’ve had clients that are, you know, they’ll tell me, Hey, you know, we just don’t, uh, we just won’t mention it. Well, the problem is you don’t mention it. It’s in the inspection report, which is I have to maintain a copy of it in this state. I have to maintain a copy of it. So if you knew about it, the house does have a fire. God forbid somebody gets hurt or not, but there is a loss that insurance company they found out that you knew about it the whole time and just chose not to fix it. That’s a big problem potentially for you. Normal wiring though, copper wiring is typically not gonna be an issue. There are areas around here, the, from the mid seventies where we were using some aluminum wiring, solid strain, aluminum wiring would be documented on that inspection report.
If anywhere that it was found visible, those are that’s a problem in the fact that it heats up over time and shrinks and expands and eventually starts to break apart inside, which can cause arcing and potential for fires. So it’s another thing that would come up on that safe D issue. If I found any of that in any of the panel or subpanels, I would make sure that’s documented. And if it were me, I would try to get that removed or remediated with there’s a couple different connectors and a couple different solutions you can use, try to make it a little more safe.
Interesting. Okay. Good stuff. Nate, any final comments? Before we wrap it up here?
Nothing on my end. This is great!
Okay. Mark. Any final comments before, uh, you tell our listeners how they can find you?
No, I think it was, uh, important and I value your guys’ feedback too, from your side of it. Because as an inspector, you know, we’re trying to report everything in a way that is not alarming to people. We, because no house is gonna be perfect. I don’t care which, which new construction where you go, no house is ever gonna be perfect. It’s just helping people understand what they’re buying. It doesn’t mean you can’t buy it. It doesn’t mean you have to buy it, but Hey, have a good understanding. This is your due diligence. Look at this and help it develop a budget to figure out what’s my long term repairs that should be done to this house. And what are things I wanna really focus on? Um, so any feedback you guys have of areas that could be better represented in an inspection report is valuable to me.
Yeah, those are great points. And I’ll add one thing to that. You know, anybody listening to this, that orders, their next inspection report, don’t let that scare you. I know we’ve had clients in the past that have freaked out, you know, with just the number of items and some of the items that were in that inspection report. But when you really stop to look at actually what is there and what needs to be done and really the, you know, the amount of effort or cost to cure that stuff. It was just really a long punch list of very small, minor items that were just very easy to clean up. And I think you need to have the expectation that stuff will come back and then you just need to be objective and unemotional looking at it and going through it like a punch list and determining what needs to be done again, you know, going back to what I like to call the must be done should be done and could be done stuff and just be objective and reasonable about it. And if you do that, then there’s no fear. It’s really a tool becomes a powerful tool. So you know what you’re getting and you have an expectation of what things might cost you in the future, or maybe better yet what you should be budgeting for years down the road in terms of the condition of that property. And what’s inside it.
It’s kind of like, to me, if you go to the doctor’s office and you get a full blood workup on everything that they could possibly test for, and then they just handed you the lab sheet with all the numbers on it, all the explanation of each little thing, and you tried to interpret the, at yourself, it looks overwhelming. It looks scary. It looks basically like you’re probably dying tomorrow, but if you have a doctor or if you have a medical professional, someone that deals with this all the time, they’re gonna be able to weed through that a, a real estate professional like yourself. They’re gonna be able to weed through these things and say, Hey, this is important. Nope. That thing is important. Hey, that’s good to have actually. So you’re in good shape. They, you know, to kind of help explain it and break it down in a way that people understand it better.
Yeah. Yeah, exactly. Yeah. It’s not rocket science. It’s just a matter of being smart about it and, and just handling it like a pro. Yep. And you know, we’re here to help you too. I mean, if you have a hard time understanding the inspection report or interpreting it or what to do, what your next is, you know, that’s what Nate is here for and the rest of our team. So we’re gonna support you on that. That should never be an issue or cause for fear or alarm. Well guys, I appreciate you taking the time, Nate. Thanks for joining me on this podcast episode and Mark, why don’t you share with our listeners where they can reach you, where can find you phone number, website, whatever you wanna plug here. And we’ll also put that in the show notes.
Sure. So again, my name is Mark Rojek with Rojek Home Services. We service the Chicago Metro area. Um, we cover pretty wide expanse for most of our clients just because the type of thing people that we work with are a lot of invest that come from all over. So we don’t try to limit it to a particular block or neighborhood. The phone number to talk to us, get ahold of us. Book inspections is 815-255-4988. And we can be found online at rojekhomeservices.com, which is R O J E K homeservices.com. Perfect.
Perfect. Sounds well guys, thank you for taking the time. This has been a great episode. I’m sure a lot of people will find value in it.
Thank you. Thank you, Marco.
Thanks. I hope this episode was helpful for you. If you have any questions, just be sure to reach out to my team. Or if you have a question specifically for Mark, then, uh, just reach out to him. There’s contact information in show notes, remember to subscribe. If you haven’t done so already thank you for listening and we will see you all on our next episode.
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