You have found a possible deal on a rental house, and it’s time for your first walkthrough. Now you must learn how to make a repair list for an investment house. I will show you how to make the repair list and point you to what’s essential. Following the steps in this article will leave you with everything you need to gauge the repair cost and make your offer on the house.
When making the initial repair list, you must know what’s important and what’s not. Often the power is off, and the water is disconnected, so everything you do will be an estimate. You need to note the big items that need repairs, but don’t worry about one or two small things. The goal is not to make a detailed punch list for your contractor but to gauge the overall cost of the renovation.
The Process
As you do your walkthrough, keep a running total of the repair cost. You can keep this in your head or jot it down on a pad while you walk around. I use my phone’s calculator and add it as I go. This running total should be a very rough estimate of the repair costs and should combine materials and labor. Your ultimate goal is to understand how much more you will need to spend to get the house rent ready so that you can make your offer. You are not making a detailed list for the workers to use. Costs you add to this total should never be less than $100, and your final number should be rounded up to the next $1,000 (note: that is rounded up).
Materials and labor are regional, so this article will not attempt to estimate costs. You should have a general idea of what things cost; if you don’t, you should get that cost. The contractor desk and building supply stores can give you much information. You could even get professional estimates for your roof or HVAC unit.
After doing this for a while, you will have a good idea of what things cost, but you still need to keep up with trends. I recently estimated a roof at $5,000, which turned out to be $8,500. Prices have been creeping up, and it had been some time since I needed a roof.
Walk Around the Outside of the House
When you first arrive, start by walking around the house. Your goal is to get a general idea of the house’s condition and upkeep as you walk around. Remember, you are not looking for every chip of paint; your main goal is determining if work will be needed in these areas.
Roof
Take a look at the roof from every angle. You don’t need to climb on the roof, but make a note of everything you can see from the yard. Sometimes it’s easy to know that a roof needs to be replaced, but there are times when major leaks are not readily apparent, which we will ascertain when inside the house. If you decide the roof needs to be replaced, add a roof’s cost to your running Total.
HVAC
Check out the HVAC unit. Is it there? Does it look like the copper has been looted? Is it old? Most of these units have a sticker that shows the year of manufacture. When these units are over ten years old, I add them as a replacement cost. An old unit may work, but you need to replace it soon; now is the time to account for that.
Windows and Doors
Look for missing windows or broken glass. Each time you see one, add the cost to replace it to your running total. I add about half the replacement cost of new windows for single-pane windows with broken glass because these are easy repairs. Ultimately, you want to add one number to your running total, not a small number for each broken window.
For doors, you need to determine if the entire door needs to be replaced. Usually, this is obvious, but sometimes looks can be misleading. Make sure you open and close each door, and check to see if the locks properly engage.
Eaves and Soffits
From the ground, visually check the eves and soffits for holes or rotten wood. Your goal is to determine if there are no repairs needs, minor maintenance, or a large replacement job. You don’t need to note everywhere there is rotten wood; add a total for repairs to your running Total.
Outside Walls
As you walk around the house, check the walls on the exterior. Are there missing bricks? Missing Siding? Crumbling trim around windows are doors? Do you need to paint the outside? Once you’ve answered these questions, you can ballpark a cost and add it to the running Total.
Quickly Walk Through the House
Once inside, walk through the entire house quickly to get a feel for the layout. This is a fast walkthrough to familiarize yourself with the house, but pay attention to the most critical items. If you miss something, don’t worry. You will be making a slower walkthrough later.
Walls
As you look at the walls, you are trying to decide if you will need to paint the entire interior. Almost every house I have bought needs the interior painted, but there are a few exceptions. Also, look for holes in the wall or other drywall problems that need remedy. For the walls, you want to end up with one number to include all wall prep and painting, not an entry for each room.
Flooring
During your quick walkthrough, inspect the flooring. Is the carpet worn? Is hardwood missing? After you’ve walked the house, you will know if you need to replace all the flooring, just a few rooms, or if a professional cleaning is all that is required. Add your estimated cost to your running total.
Slowly Walk Through the House Again
The final step to making a repair list for an investment house is to walk inside one more time. This time we are looking for things in the house to determine if anything is broken.
Kitchen
In the kitchen, check all the appliances to see if they are usable. I don’t always put appliances in my rentals, but you need to know what you are buying. Ensure the cabinet doors are operational and that the countertop condition is acceptable. Don’t forget to check under the sink for wet or rotten wood. Update your running total with the estimated cost to get the kitchen ready.
Fixtures
Check all the fixtures as you go. If the power is on, see if the lights work. When the water is on, try each faucet. Your goal is to determine if most of the fixtures work and not keep up with a single dripping faucet. In the end, add the cost of repairs to your running total, but if it’s tiny, leave it off.
Bathroom
In each bathroom, check the condition of the cabinets, toilet, and shower. If you have water, make sure everything works. Here add the cost to repair or replace anything that needs to be addressed, but the flooring should have been included in the quick walk-through.
Doors
Make sure all the interior doors will open and that the door latches in engage. When opening the door, open it all the way to ensure no warped flooring will stop the door. If doors need to be replaced, add that to your running total.
Attic
If the house has an attic, take a look inside. Looking in the attic is an often overlooked step in making a repair list for an investment house. You don’t have to enter the attic and walk around but want to shine a light on the ceiling. You are mainly looking for signs of a leaking roof or rotten rafters.
Conclusion
This article has shown you how to make a repair list for an investment house using the approach I have used for many years. It gives a quick way to come up with a general idea of what the repairs will cost, so you make offers on investment properties. In addition, this article covers standard items you will often find and is not for every property. If the property has a swimming pool, fire pit, external buildings, or other unique attributes, you need to expand your inspection accordingly. The main takeaway from this article is to make a rough estimate so you can get on with the offer. Very few offers lead to a deal, so wait on the detailed list with the exact cost until you own the property. If this is your first rental house, look at my complete guide to buying a rental home.
