Recently, we’ve had some questions from clients about how we handle roof repairs on houses we acquire. Specifically, do we replace roofs on all houses we buy? And if we don’t, then how do we gauge the life of this high dollar item? Finally, what guarantees do we offer if the roof has problems shortly after the investor closes?
First, we inspect all high dollar items the same way – we walk through EVERY house before we buy it and make a judgment call on the front end regarding whether to keep it, or replace it.
– Water heaters
– AC Units
We are not experts in these fields like professional property inspectors are. However, we have bought hundreds of houses over the past 7 years and we are pretty good at: 1) finding out the age of such items and 2) knowing whether or not they are in good condition and still have significant useful life left.
We feel that it is our job to rehab the house to SOLID rental status with EXCEPTIONAL quality, but also keep costs as low as possible in order to give the end buyer the best deal possible. In order to do this, we evaluate what we feel we can salvage in a property and keep it if we feel that it still works. The majority of the cost in a renovation comes from the high dollar items- roofs, water heaters, HVAC units, appliances, etc.
If a roof still has more than 5 years of useful life left, we’ll keep it. If the furnace or AC Condenser is functioning fine and has more than 2 years of useful life left, we’ll keep it. If the house has appliances in the kitchen that are working fine (dishwashers especially), we’ll keep them.
But in order for us to know weather or not to keep an item we must:
- Perform a visual inspection – Does the roof coloring look good? Are the shingles laying flat (no buckling)? Are there shingles missing? Do they look brittle? Is there significant wear and tear or is it minimal?
- Calculate current age of item – To calculate the age of a roof we look at the year the house was built (1983) and calculate backwards from our current year (29 years old). Then we do a visual inspection of the condition of the roof (see item #1 above). If the roof looks significantly old and worn, then we know it’s probably the original roof and needs to go. If, however, it looks good then we know it’s probably been replaced at sometime in the past (after the house was built). If the house was built in 1983 and the current roof looks good, then we can roughly calculate the age of the roof. Depending upon the climate in which they are installed, asphalt roof shingles typically last between 15 to 20 years. Knowing this, we can roughly calculate that the current roof is anywhere from 9 to 14 years old. Therefore, it still has roughly 10 years of useful life left and we’ll keep it.
This is still a judgment call on our end and not an exact science. This is where the property inspection comes in- to verify or refute our judgment on these items. We’ve worked closely with our property inspectors over the years and learned their methodology for judging the age of a roof. Many inspectors will report that “the roof is near the end of its useful life” when they prepare the report. At that point we’ll usually ask them what they feel the age of the roof is and then estimate the useful life left. Then decide whether or not to keep it, or replace it.
If we’re correct, we’ll keep the existing items and move forward. If not, the home inspection will catch it and we’ll replace it. However, if both fail and we sell a house and there’s a problem within 1 year AFTER the buyer closes- the home warranty will cover it. That’s how we work!
We want ALL our property inspections to be thorough, because the quality of our product and our clients’ satisfaction matters to us. But we also have to control costs so that the deal works. So, it’s a tradeoff between making everything new and driving the price of the home up, or keeping existing stuff that’s still functioning well and keeping costs low.
Bottom line – we’ll keep the high dollar items if we inspect them on the front end and feel they’re still functional, but we’ll replace them at our cost if the home inspection reveals otherwise.
We want our clients to have a good experience doing deals with us because we want repeat business and we want the Memphis Turnkey Brand to build and endure for a long time. We’re committed to doing whatever it takes to make this happen, and we’re also committed to controlling costs so the numbers of the deal work for the investor-buyer.
If you have further questions regarding this issues, please CONTACT US.