How to Hire a House Inspector 101 (026)
How to Hire a House Inspector 101 (026)
Transcript:
Steven Butala: Steve and Jill here.
Jill DeWit: Hi.
Steven Butala: Welcome to the House Academy Show, entertaining real estate investment talk. I’m Steven Jack Butala.
Jill DeWit: And I’m entertained. And I am Jill Dewit, broadcasting from sunny southern California.
Steven Butala: Today Jill and I talk about how to hire a house inspector one-on-one.
Jill DeWit: I love it.
Steven Butala: I hesitated because for five years we’ve been doing the Land Academy Show.
Jill DeWit: I know.
Steven Butala: And just recently we started, this is episode 26, recently started the House Academy Show, and it’s a difference for us.
Jill DeWit: I can’t believe we’re on number 26.
Steven Butala: I can’t either. Actually I added them up a couple of days ago and it’s like 1,150 or some number-
Jill DeWit: All of them?
Steven Butala: Yeah.
Jill DeWit: Well, this feels like 126 right now.
Steven Butala: You mean with the new studio and all?
Jill DeWit: Yeah.
Steven Butala: Me too. We’re there, though.
Jill DeWit: We are.
Steven Butala: Before we get into the topic, let’s take a question posted by one of our members on the houseacademy.com online community. It’s free.
Jill DeWit: Jay asks, “I’m new to house wholesaling and need some advice. Where do I start, and how? I’m having trouble taking the first step.” Well, funny because I just covered that in the webinar that we did last week. So Jay I don’t know if you saw that. You could go on YouTube or Facebook and watch that where we talked about what you need to do to get started. So my first thing is if you haven’t already done your really serious hardcore research, I want research. I want time spent. I don’t want you to dive into this cold. I want you to come into this having a real good feeling for what it is. I want you to have a budget. I want you to think about getting educated, and it might take six months before you really pull the trigger and that’s okay.
Steven Butala: Here’s some real simple one liners advice to everybody who purchases and sells houses for a living out there, regardless of where you are in your career, from an old guy like me. We’ve done over 16,000 transactions. Number one, if it’s on the MLS, you’re way too late. Leave real estate agents entirely out of your process of buying a house. Selling it? Not so bad. Fixed price listings, there’s a lot of options. But leave real estate agents out of it.
Steven Butala: In fact, this is kind of timely for this topic because there are a few people that you really do need and you need to befriend and pay them well. One of them is the house inspector, actually. But if you’re just starting out, it’s kind of like the karate kid. You got to wax on, wax off first for quite some time until you’re like, “When am I going to actually get to do this?” You need to do a lot of research, spend a lot of time online, join Bigger Pockets. Join the houseacademy.com and probably landinvestors.com, and ask a lot of questions-
Jill DeWit: Our online forums in there.
Steven Butala: Yeah, our online forums. Ask a lot of questions and befriend a lot of people online and ask them the mistakes that they made. If you’re brand new and younger, I would spend six months on this without ever spending a dollar.
Jill DeWit: That’s what I think.
Steven Butala: You’ll find out where people failed and where they succeeded. And if anybody says, “Oh yeah, the first year I did was great and my sister’s a real estate agent, and we did awesome and it’s all peaches and cream and roses out there in the house investing world,” run the other way.
Jill DeWit: I love it.
Steven Butala: Because it’s not reality.
Jill DeWit: That’s true.
Steven Butala: The reality is you need to go find these properties on your own. We do it through direct mail offers, blind offer campaigns and it works very well, very consistently, and that’s how we manage to do it. There’s other ways so … it’s worth it. It’s worth your time. There’s a lot of things in life that you get done with it and you’re like, “Man, that wasn’t worth it at all.”
Jill DeWit: Like one, I know you always have one … don’t say parenting.
Steven Butala: Oh no, you said it.
Jill DeWit: Sorry.
Steven Butala: Parenting maybe. I was thinking about all the-
Jill DeWit: Depends on the stage-
Steven Butala: Relationships, all the relationships you’ve ever had with a female until the one that you have right now probably wasn’t worth it.
Jill DeWit: There we go. Good example.
Steven Butala: This topic, how to hire a house inspector one-on-one, this is why you’re listening. Hiring a house inspector, like hiring a title X escrow agent, is cumbersome and time consuming, and extremely rewarding at the end. And my big advice here is, Jill will get into exactly what you need out of a house inspector, but my big picture advice is about house inspectors and title agents and the team that you kind of, outsource team that you surround yourself with, you’re going to have to go through a few people, through several people probably until you find one that clicks with you.
Jill DeWit: Right. You want one that works with you, not against you. And they’re out there. You know that. If you’ve never done this before, when you’re going through this process, you’ll find there’s house inspectors are gonna walk around and like you just said, you will click. And there’s others that will walk around trying to find every flaw and make it fatal when we all know they’re not fatal.
Jill DeWit: So there might be, you want to make sure they are working with you. A good house inspector is really there just to point out things so you know you’re making a good acquisition. That’s it. You want them to uncover hidden things that you didn’t do in your walk around. As you’re going through this process, what I’ve learned too, a couple little tricks, pay them fast because they’re working as fast as they get paid.
Jill DeWit: If you’re slow paying them, they’re slowing down your job. It’s really silly, but it’s true. So the minute our guy sends an invoice, we pay him immediately and he knows that. And that’s the way we operate now and what the end result is, when you find a good guy and he has worked with you and he does connect with you, and he knows that every single time you pay him so fast, you better believe that when the phone rings and it’s you, he jumps on it. He moves people around to accommodate us, to get our things done first. And it does take several to get the right one. Like you just said, going through it, going through a title agent, it’s the exact same thing.
Steven Butala: So once you get back, when you look, I would if you’re brand new at this, I would go over, go on the internet and just try to get copies of pdf sample house inspections. And what you’ll notice about this, and the same thing with the title report, is 50 to 80, 70% of it is all templated crap. It’s that 20 or 30% that you really want to review that’s specific about the house and you should see things … Look, this guy’s either going to try to kill your deal or he’s going to help you.
Jill DeWit: Exactly.
Steven Butala: Help you get it done. And he’s going to like a real person, like a brother would say, “Hey, you’re my sister and you’re buying this house. This is good, this is good, this is good. But I really do have some concerns about this water heater, which is no big deal. It’s gonna cost you x, y, z. Deal with it in the deal how you want to, but you are going to need a new water heater relatively soon. Air conditioning works great. It’s only two years old.”
Steven Butala: So you need to have that kind of relationship with the house inspector and he needs to be fast and honest and straightforward, and he should never … house inspectors a awhile ago got in a lot of trouble for this. I’m old enough to remember when house inspectors were the contractors that would sell you on doing the repairs.
Jill DeWit: Oh.
Steven Butala: And now they’ve separated all that.
Jill DeWit: Right. Plan on spending a couple hours too. This usually is our process. We don’t go out and do that, but this is one of the things that our boots on the ground does, and they go out and meet them and they walk them, walk the property with them the whole time. So they’re right there knowing what’s going on and having a conversation about it. And it takes a while. It’s three or four hours, is what you need to plan on. And then another, usually it’s three to four hours say in the morning, and then in the afternoon they can compile their photos and-
Steven Butala: Same day.
Jill DeWit: Then often, yeah, at the end of the day you will have your report.
Steven Butala: So in a long list, well on a short list of due diligence that we talked about in that, actually in the Land Academy show this week, we talk about it. In a short list of due diligence you’re going to order a house inspection and it happens here. You send a bunch of mail out, some purchase agreements come back or the sellers call you and they say, “Yeah, we do want to sell our house.” And it passes all your tests, the financial tests, and it passes your test about who owns a house.
Steven Butala: Yes, I’m talking to Sally Jones on the house. Yep, she’s the owner of record. Yeah, she’s selling it to me for at least a hundred thousand dollars or $50,000 less than I can resell it for immediately. Check, check, check. And then you ask yourself this question: is this house a pile of junk or is it tenantable? And that’s when you order an inspection. By the way, you order an inspection on every single deal. So what you’re doing is saying, I really do want to do this deal and I hope this inspection comes back not too critical. And then that’s it.
Jill DeWit: And it’s usually for most of our deals it’s around $400, what I found. It’s kind of the sweet spot, and it’s money well spent. Because sometimes I know people like, “Shucks, I don’t wanna spend $400 if I’m not going to buy it. All this, I wasted $400.” No you didn’t. You spent $400 to save you from wasting a couple hundred thousand dollars if you find something in there. It’s money well spent.
Steven Butala: For us by the time we get to the home inspection point in the due diligence period, we’ve already raised the capital. I mean, we want to do the deal. So what we’re looking for is glaring issues. In California, the foundation issues are a big deal. In Arizona, not so much. In Arizona heating and cooling and roofing and stuff because it’s so hot, is real critical, whatever’s on the roof. But it’s got to be real critical for us to not.
Steven Butala: And then the big benefit too is, and I’ll close on this unless you have anything else to say, the real huge benefit is now you’ve got a pdf or a piece of paper, an inspection that’s passed your tests and you own the house now and you’re handing that over to your buyer who’s going to either renovate the house or rent it out. And that’s very valuable. And you can say, you’re knowledgeable enough to talk to your buyer and say, “You know, I’m most concerned about this, this and this. So if you want to work out on the price, I know it needs a new water heater. The HVAC’s brand new, roof should have 10 years left on it.” Now you’re a knowledgeable buyer. You’re not just an idiot wholesaler who’s emailing APNs around like we all get.
Jill DeWit: Exactly. And you save them a lot of time and a lot of money.
Steven Butala: The world is full of idiot wholesalers. Don’t be one of those guys.
Jill DeWit: Exactly.
Steven Butala: Join us next time for the episode called … the ins and outs of babysitting a house deal.
Jill DeWit: Now we answer your questions posted on our online community found at houseacademy.com. It is free.
Steven Butala: You are not alone in your real estate ambition.
Jill DeWit: You know one of the things I didn’t mention I was going to add here is that, get the termite too. You always want to do that. I mean, I don’t think there’s any part of the country that is magically termite free.
Steven Butala: Yeah, I talked to a termite inspector once and he said this quote. He said, “There’s two stages that a house is in with termites everywhere in the country. You don’t have them or you will have them. You don’t currently have termites, but you’re on your way to having termites.”
Jill DeWit: You will have them, or you have had them.
Steven Butala: Yeah, or which stage is this house in?
Jill DeWit: Exactly.
Steven Butala: You can see termites if you look it up. It’s pretty simple.
Jill DeWit: It’s kind of yucky. I don’t want it. Wherever you’re watching, wherever you’re listening, please subscribe and rate us there.
Both: We are Steve and Jill.
Steven Butala: Information-
Jill DeWit: And inspiration-
Steven Butala: To buy undervalued property.
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