The Most Important Aspects of An Inspection Contingency w/Jim Barker

In this episode we get Roofstock and Streetlane's VP of Construction, Jim Barker's take on what investors should keep an eye out for on inspection reports, and what to consider that might not be on it.   --- Transcript   Tom: Greetings, and welcome to The Remote Real Estate Investor. In today's weekend wisdom, we have Jim Barker. Jim is a seasoned professional in the single family space. He is the VP of construction at Streetlane and Roofstock and has seen thousands the homes. And the question we asked for him today is what are some key parts of the inspection contingency that he looks at?   Theme Song   Jim: Yeah, I know it's a it's a great question. And we're buying houses every week for institutional clients and bought thousands of houses for various owners over the last few years. And these are always things that come up is when you get an inspection report back -- what to worry about and what is fixable. Because there's things that you want to avoid that that are or maybe you know, functional obsolescence or something that is really foundational to the home that that is going to be a long term problem. And that those are the things that I really look for when I am going through an inspection report. And then there's things that are just either aesthetics or basic functional that they have a dollar amount next to them for a repair, replace, but as long as you understand that, it's still a good asset, and those things are easily fixed.   So that's kind of how I divide up the inspection reports. When I go through them, I really look for any sort of long term functional issues like structural cracks, I really try to avoid poor drainage, and that may cause water damage. And another thing with basements that we see quite a bit of is, you get a 50 year flood, or 100 year flood, which I use that term, but how come it always seems like this, these flood events happen so much more often than 50 or 100 years. And if you're a property owner, it always seems to happen while you own it. So I'm very leery about drainage, especially in homes with basements and want to make sure that it's not sitting on a downhill slope or that the gutters are properly diverting water away. But you know, other things like does the home have insulation in the attic? Or that that's something that you don’t really think about, but it really impacts the livability of that home.   And the things that everybody always wants to look at, or like old HVAC the water heater, and it's good. But those are simple fixes. I mean, it's $1 amount, but once you swap it out for new equipment, you don't worry about it again for the lifespan of that equipment. So I guess that's it really for me is I want to focus on things that are not easily fixed and structural water damage, strange layout of rooms and things that may not show up on the inspection report the neighborhood issues, right? That's a as somebody who's doing their due diligence, not just to look at the asset, but really look at, you know, the immediate surrounding neighborhood.   Emil: I like that. I like that you frame that. An old age back and all the water heater, they're really not big deals because a first time investor, they'll see that. And I think like the warning signs go off. And you're right. It's just it's $1 amount. It's not that complicated. Someone can change it out in a day. Like it's not a long term issue. It's just going to cost them money to fix.     Jim: Yeah, no, it's the things that where you really have to rip into the structure or that I don't like to deal with it. If I'm not an experienced construction professional or have a contractor that I really trust, it's just tough to. You'll even fix some of those issues, and you're never quite sure if you really got them or like you said on the water heater, once you change it out, it's done. I would say it probably should touch on it though. Something that we've seen pretty regularly in the portfolios that we manage to is older plumbin