Considering Repair Costs
Is the building you're considering structurally sound? Take a close look at the roof. Does it sag or is it curling along the edges? A roof might sag because the rafters are too small. The shingles might be curling because they're old and need to be replaced. Always look for water stains on the ceilings and walls. Find out how old the roof is, how many layers of shingles it has, and how soon it will have to be replaced. You might be looking at a bill near $10,000 to take off old shingles and put on new. Replacing a roof on a Victorian home probably will cost upward of $20,000.
Floors can be a problem as well. Are they level? If floors are sagging or bouncy, the floor joists may be too small for the span. There may be bearing walls without adequate support or a bearing wall that someone removed, wanting to enlarge a space, without thinking about what it was holding up. Is the foundation sound or will it need repairs?
Don't hesitate to hire a building inspector to go over the building if you are unsure or have any questions about its structural integrity. Think of it as having a mechanic go over a used car you're thinking about buying. A few bucks up front may save you thousands later, not to mention reducing your aggravation.
Look at the plumbing and wiring. If they are in bad shape or have been stripped out, replacing them will be costly and an immediate expense. How are the windows? Are they hard to open and close, are they drafty? Windows are another huge expense, but looking on the bright side, if they're replaced, they'll make the house much more energy efficient. Can you afford to do them now, or just a couple of those that are in the worst shape?
When you haven't built up equity in the property, you might not qualify for a home-improvement loan; so do you have enough money set aside to do critical repairs that will make the building habitable enough for you to get a tenant?
Also, find out whether the title on the property is clear or if there are any outstanding taxes or liens that have to be paid to clear it. Contractors place liens on property when they haven't been paid for their work.
