Home Inspections for Investors (Part 2)
Please note that this article contains a few product links to Amazon meth house test kits that we thought might be useful to our readers who are shopping for flips. These kits are a low cost way to test for chemical residue before you purchase a home that you suspect might be contaminated. If the test comes back negative but all the signs are there, it’s very important to have a professional company test the home so you can make an informed decision about if you still want to purchase it.
At the end of this article, there’s a list of items to look for that may help you spot grow houses or a meth houses when you see them.
We wish to disclose to you that any Amazon products that we recommend on this site, such as these test kits, may result in a small commission for our endorsement, recommendation, testimonial, or link, because FlipOrHold.com is a participant in the Amazon Services LLC Associates Program which is an affiliate advertising program designed to provide a means for sites like ours to earn advertising fees by advertising and linking to Amazon.com.
What Items Should be on Your Inspection Checklist?
State requirements vary for items to be included in basic Home Inspections, but below is a list of the items most commonly checked in home inspections.
Visible pipes inspected, functioning fixtures, no leaks, adequate water pressure, toilet operates properly, waste pipes in good condition, no signs of previous leaking around base of tub, shower or under sink, adequately sized water heater that is functioning and properly vented with no signs of rust, no asbestos wrap on pipes.
Smoke Detectors & Fireplaces
Smoke and carbon monoxide detectors installed in locations required by local ordinances, fireplace in good condition with no signs of back-drafting, properly functioning damper, flue liner.
Structure & Grounds
Foundation in good condition, no signs of wood destroying insects or wood rot, no peeling paint, proper grading, downspouts and drainage, no overhanging tree branches, proper railings, window and doorframes appear square, no broken windows, no sagging or bowed exterior walls, vapor barrier in any crawl space where appropriate, no evidence of decay or damage.
Roof & Attic
Flashing, soffits and fascia in place and in good condition, proper exterior venting, gutters, chimneys, proper insulation, not too many layers of roofing, no exhaust vents terminating in attic.
Fixtures and switches functioning, adequate outlets in each room, ground fault circuit interrupter (GFCI) protection on outlets near sinks, service panel in good condition, no “knob and tube” or aluminum wiring, no exposed splices, cables secured properly.
Heating and cooling source in every room, good air flow, units in good condition without rust, no gas odor, proper venting, clean filter, ductwork in good condition.
Appliances turn on and function, dishwasher drains properly, working and properly vented exhaust fan above stove.
Ask your Home Inspection company exactly what is covered in your inspection.
Some companies offer additional options for your home inspection. For example, you may need a septic inspection on an older home, or want to have a radon or mold test, or some other specific item such as a water quality test if the home has well water. Ask your home inspection company what services they offer so they cover everything you need during the inspection.
Some Items that May Not Be Included:
What’s Inside the Walls
Inspectors will not open walls to check for mold or other problems. If you have an opportunity to have an inspection on a rehabbed home before the drywall goes up you will have a better view of any problems with the plumbing or electrical wiring.
Radon gas may or may not be included in a standard inspection so ask your Home Inspector to be sure this is checked.
Meth Lab Residue
This is typically not included in a standard home inspection. If you want to be on the safe side ask for this extra testing. If you discover this problem after purchasing a property the home may not be livable or able to be resold.
Septic systems, toxic drywall, well water quality, lead paint, proper permits or other items may not be included in a standard home inspection in your area. Make sure you ask for everything that you need for your particular property and situation. Inspectors also may not check if outlets or fixtures have been installed according to code or current accessibility requirements.
Don’t Cross Off Properties with Problems Too Quickly.
These homes could be priced well below their value.
Once you become familiar with the cost and time involved to fix various problems that you might encounter, you might prefer to select only properties with problems other buyers don’t want to tackle.
Sometimes these can be bargains if you have a reputable licensed contractor to help you with issues such as mold. As you build up your contact list for trusted contractors, you may start to feel more comfortable taking on such issues.
Depending on the price point of the properties you are buying, some investors skip the inspection knowing they are going to do a gut renovation anyway. However, this is not recommended until you are confident that you can spot foundation issues and other major problems on your own. Until you are a seasoned investor and feel confident in your skills selecting properties without outside advisors, it’s important to consult a trusted professional to help you evaluate on a case by case basis if the home is a good investment even with any problems it has, or if it is too big of a risk and too costly of a project to repair.
Some Additional Notes:
Always use a reputable and licensed Home Inspector. Ask them how long they have been in business and if this is their exclusive profession. Ask if they have additional certification such as ASHI. Ask if they have Errors and Omissions insurance. Consider purchasing extra add-on services if their base services do not cover every test you would like to have done before making an offer. Also, check the meth home registry and consider getting this extra test for peace of mind. Often real estate brokers will recommend a particular home inspector they have used, but the home buyer can choose any inspector they would like to use. Always be present when the inspection is performed.
Consider having an inspection before putting your home on the market so you have the option to fix what’s wrong before listing the home and do not give away your bargaining power.
Don’t cross off properties with problems too quickly. Sometimes these can be bargains if you have a reputable licensed contractor to help you with issues such as mold. These homes could be priced well below their value. Always consult a trusted professional to help you evaluate on a case by case basis if the home is a good investment even with the problems it has, or if it is too big of a risk and too costly of a project to repair.
Although not all home inspectors offer it, you may have the choice of a walk-and-talk style inspection instead of a full written report. These inspections may be a good option if you’re on a tight budget or shopping in a market where properties sell fast so that you don’t waste time waiting to receive a written report.
If you are purchasing properties to flip in a highly competitive market, only schedule your inspection when you are really ready to make an offer, because sometimes these properties go fast and you don’t want to waste your money on inspections for properties you will not be able to buy.
If you have renovated a property and are ready to sell it, an inspection can help you identify any problems before you put the property on the market. This way you will know what the potential buyer’s inspector would find and can remedy any issues before they become a negotiation tool on the part of the buyer.
Don’t be too scared when inspections find things wrong, because you want a property with some problems that you will fix by renovating it. Otherwise, there would probably be no profit margin if you are buying a home that’s in perfect condition for market rate.
Mold is an example that scares off a lot of people, and sometimes for good reason. But a lot of times the clean up cost from a reputable company that can guarantee their work is not actually that pricey. So you may be able to get the house at a very low price due to the fact mold turns buyers away. If you suspect the mold can be remediated without breaking your budget, it may be worth getting an estimate before you rule out the property. That being said–even walking through a house with certain types of mold can be harmful, so until it is remediated, you don’t want to breath it or expose yourself or your contractors to it without proper masks and coverings.
Spotting Grow Houses and Meth Houses
If you encounter a home that has evidence of a history as a grow house or meth house, you probably will want to walk away even if it’s a great price in a great area. Removing hazardous chemicals can be difficult to impossible, and you may face a big problem if a buyer or renter reports health problems and discovers chemical residue from either of these issues.
Former marijuana grow houses also may come with mold or moisture issues as well as chemical residue. Meth houses are extremely hazardous to clean up, and may or may not be salvageable, so do your research if you have any suspicion at all and don’t rush into making an offer.
These homes are sometimes found in upscale neighborhoods also, so be aware that they don’t always look like you might expect. Or they may have been fixed up by a relative or flipper, but still contain toxic residue. A typical home inspection often will not find these issues, or may require specific additional tests to make a definite determination.
Though it’s not a certain way to identify these houses, and this is definitely not an exhaustive list, below are a few warning signs that might help you identify grow houses and meth houses with just a quick look around. If you see any of these issues, hire a professional for a closer examination before you make a purchase.
Remember that not all of the items in the below list are only present in these type of homes, for example there could be bars on windows without indicating the residents are doing anything wrong, and empty homes that were foreclosures may be required by the local health department to keep windows boarded to secure the property from break-ins.
- It’s the only house in the neighborhood without snow on its roof in the winter. There are other legitimate reasons this can happen, so don’t start suspecting your neighbors with less snowy roofs of illegal activity if they are innocent, but it’s just one of many small signs to suggest that you might want to investigate further.
- There are signs of a lot of humidity in the attic.
- A lot of extra wiring inside or wiring protruding from walls.
- The extra wiring bypasses the electrical meter.
- No one appears to live in the home.
- All the windows are covered with dark curtains or boards.
- The home has an odor that some describe as similar to skunk odor (although odor scrubbing devices might be in use, so odor may not always be present)
- Lots of vents on the exterior, especially on the roof.
- Bars on the windows.
- The basement floor was recently painted.
- Condensation around windows.
- Many extra garden hoses.
- Children’s toys in the front yard but no children are ever seen at the home.
- Neighbors report that the lights never go on or off, or bright lights are see around the edges of any boarded windows.
- Neighbors do not know the occupants or ever communicate with them.
- No garbage is put out on garbage days.
- Several people come and go from the house, usually not from the front door, and they may have nicer cars than one would expect with the condition of the house.
- Attic spaces may be used for this purpose so don’t skip checking out the attic.
- Joists in the basement may have mold or evidence of holes where extra wiring was run through along the length of the house.
- The home was just purchased a year or so ago and is now up for sale again.
- Glass jugs, such as milk jugs, lying around.
- More than a reasonable amount of paint cans.
- Many bottles of antifreeze.
- Statistically these homes, at the time of writing, are less common in city centers and more common farther outside of cities. That doesn’t mean they are never in city centers.
- Search for the address in the Drug Enforcement Agency (DEA) database.
- Evidence of paraphernalia.
- Strong chemical odor or strong urine smell.
- Stained walls and carpets.
- New doors and doorframes in an old house.
- Talk to neighbors and the local mail carrier. Mail carriers are an especially knowledgeable, and often overlooked, resource for investors.
The DEA database of known meth houses may not be an exhaustive list since it won’t show homes that were not yet discovered as such, but it’s definitely worth checking. Also, it can help you identify if any homes near your target home are listed and going to be an issue. It won’t be easy to sell your newly renovated home if the neighbors’ are listed as a meth house.
Stained walls can also occur from heavy smokers, but while smoke might be able to be remediated with paint, or by gutting all the walls and installing new drywall, the chemical residue from meth is much more insidious. It might be possible to remediate the meth chemicals by gutting the house, but some residue could still remain even after new drywall is installed.
Note that meth labs will have much higher levels of contaminate than homes where meth users lived or were squatting.
If you decide to take on a project like this, you will definitely want to consult a highly reputable remediation company that’s licensed and bonded and guarantees their work. Not only could it be excessively expensive to remediate, but if you don’t fully eliminate all of the chemical residue, you could face a lawsuit from future buyers or renters, or not be able to sell or rent the property at all.
INVESTOR TIP: Be sure when you sell the house to obtain a waiver from the buyer stating that they were made aware of the house’s history!
It’s also not a bad idea to purchase a meth residue kit just as a preliminary test. We have not personally tested these specific kits, but these are a couple that are available on Amazon and rated four stars or above at the time of writing.
These kits are cheap and handy for a quick test, however we highly recommend that if the test kit comes back negative but you suspect the house has been used as a meth house that you hire a professional company to test it. Do not just rely on these low cost kits for such a big financial investment because grow houses and meth houses can cause liability issues and financial losses to investors.
There are a lot of contaminated homes on the market, and they often have too good to be true prices. Some look rundown and abandoned, while others are in upscale neighborhoods or multi-family condo buildings. In grow houses that don’t look like they need gut renovations, the wiring or heating systems may have been altered and won’t be up to code. Be sure to keep an eye out for any evidence that could indicate a property might be contaminated, and be aware of the extra costs and risks you are taking if you decide to purchase one.
LANDLORD TIP: Check your properties regularly! If one of your residents is using your property as a grow house or meth house you could face big financial losses and major liability issues. If you use a property manager, require that they do regular interior inspections of all units.