Long before Tom Hanks found his character marooned on a deserted island, he starred with Shelley Long in a 1986 film called The Money Pit.
A young couple’s excitement at the prospect of buying an attractive investment property at a basement bargain price quickly turns into a nightmare.
Some of the issues the couple discovers in their new money pit include water flooding out of walls and electrical explosions that make most fireworks displays seem tame.
You have heard of buyer’s remorse. Investing your hard-earned cash into a money pit is much more than feeling buyer’s remorse.
It’s feeling the worst possible feeling, but there is a way to avoid getting blindsided by a broken-down investment property.
According to Utopia Management, you should look out for these eight red flags that your investment property is a money pit.
It Starts With the Foundation
Working with a real estate inspector, examine the condition of an investment property’s foundation.
A structure is based on the foundation, which means a weak foundation can contribute to other structural issues like cracks in the walls and pipes that suddenly burst.
Your investment property should be constructed on a rock-solid foundation that is accurately leveled for stability.
Check to see if poor drainage is causing the soil to erode on one or more sides of the property.
Speaking of Cracks
The moment you walk into a house or an apartment, check to see if any cracks have developed on the floor, walls, and/or ceiling.
Cracks are not a good sign for a house, especially one that you might invest in.
Cracks often develop because of the stress placed on a structure, but the good news is you can fix most cracks.
However, cracks that are left unattended for prolonged periods can cause the collapse of a section of your investment property.
Take your investment property inspection to the next level by detecting whether any mold has started to grow.
Check the usual suspects like the basement and garage to discover mold.
Do not forget to check in the bathroom and in rooms that have high levels of humidity.
A professional mold tester is a good choice to ensure you discover all mold sources.
Mold can destroy a house by rotting away walls, ceilings, and floorboards.
It also can trigger serious health ailments, especially for the respiratory system.
Mold is not the only reason why you might smell foul odors inside an investment property.
A rotten egg smell can indicate a major problem with the plumbing system.
If you smell gas, contact the local gas company to come out and check every line for leaks.
Even the smell of a dead rodent should raise a red flag because it means an animal has found a way to enter your property.
Faulty Electrical System
The sparks emitted from the young couple’s new investment property in The Money Pit generated plenty of laughs.
However, there is nothing funny about a dangerously wired electrical system.
You should test the electrical capability of a house or an apartment building before you agree to buy it.
Plugging in several appliances at the same time should give you a good idea about an investment property’s capacity to produce energy safely.
A professional inspector can help you examine an electrical system.
Moisture often does not make its presence felt. It lurks behind drywall, above an attic’s ceiling, and behind an appliance in the basement.
A frequent sign of moisture in a house is warped drywall.
In fact, any material that appears warped is an indication that there is moisture lurking somewhere in an investment property.
The inspector that you hire to examine the condition of an investment property will take a close look at the condition of the roof.
A roof that misses shingles can be the first sign that it needs to be either replaced or refurbished.
A roof in poor condition can collapse and damage many of your valuable possessions, as well as injure you and/or a loved one.
A money pit for a house is not all about the obvious problems. It is also about the amount of maintenance you might have to perform.
An investment property in bad condition is called a money pit because it drains money faster than Bernie Madoff drained the bank accounts of investors.
If your home requires a considerable amount of maintenance, then you have another way for the investment property to send your hard-earned cash into the money pit.
The Bottom Line
Hiring a state-licensed inspector is an effective way to avoid the money pit.
Another way to sidestep the money pit is to work with a reputable property management company such as Utopia Management.
A property management company can help you detect the signs of a money pit, as well as help you manage your investment property.