Successful buy-to-let property investors are people who understand risk. Glamorous housing units do not necessarily make the best investments. What is most important is controlling risk.
Risk as regards asking price. Are you being asked to over-pay given the size, condition and location of the house?
Risk as regards likelihood of a decent and reliable net return. Will the property yield an attractive, trouble-free and growing net income stream from rentals?
Risk as regards likelihood of a decent capital gain in time. Will the property be easy to resell when the time comes? Is its value likely to grow over the years?
Home inspections are a useful tool for buy-to-let investors seeking to control their risk. Savvy property investors use professional home inspections for both pre-purchase reports and for tenant entry and exit inspections.
Pre-purchase inspection reports give the potential investor advance warning on what is wrong with the property and how much it will cost to fix – both as regards immediate problems and on-going maintenance costs. Home inspectors are trained all-rounders with a detailed insight into all aspects of the building envelope.
A good home inspector will assess the roof covering, flashing, waterproofing and rain goods (gutters and downpipes).
He will check the roof structure and give you early warning regarding geyser condition and shoddy electrical and plumbing installations.
The inspector understands damp and the causes thereof and should be able to make remedial recommendations.
The inspector’s trained eye will spot and document everything that needs fixing – from the cracked pane of glass, to the grout which needs re-doing to storm water which requires better management.
What’s more a good home inspection report should also provide the investor with a breakdown of estimated costs of repair.
HouseCheck, a national home inspection company, bases its fees on a basic charge of R600 (to cover the roof and exteriors) plus R300 per room. A detailed inspection report for an average 3-bedroom, 2-bathroom home will cost around R3 000.
HouseCheck also has specialised reporting templates for rental entry inspections, which document, with photographs and descriptions, all defects, fittings and furnishings. Both landlord and tenant sign the inspection report and that way there is no room of arguments at the end of the lease. The cost of such inspection reports varies between R2 000 and R3 500.