REAL ESTATE DUE DILIGENCE PART 1

Performing due diligence is essential before purchasing any property. The physical inspection of the condition of a property gives the purchaser first hand knowledge of its best qualities and defects. Finding out what is wrong with a property after it has been purchased can create costly expenses.

So here's a walk through checklist:

I. Exterior
a. CHIMNEYS
Is the masonry cap cracked or broken?
Are any bricks flaking or missing? Mortar missing?
Is the chimney leaning?
b. SOFFITS AND FASCIA
Any loose or missing sections?
If wood, are there any paint problems? Any visible rot?
c. GUTTERS AND DOWNSPOUTS
Ensure gutters slope down toward downspouts
Any rust or peeling paint?
Apparent leaks or loose/sagging sections?
Are the downspouts extended away from the foundations?
d. WALL COVERINGS
Look for missing mortar
Are the bricks flaking or cracking?
Look for loose, missing or rotten siding, deteriorated paint.
Does the siding appear new? Does it hide the foundation wall?
Exterior walls bowed, bulged or leaning?
e. PORCHES AND DECKS
Cracking or flaking masonry?
Check for paint problems, rotted wood, and wood-earth contact.
Inspect the underside, if accessible.

II. Roof
a. ROOF & LEAKS
Is the ridge (peak) showing sag, or is it straight and level?
Is the roof sagging between the rafters or trusses?
Are there any signs of deterioration of asphalt shingles, such as curling, wasping, broken edges, rounded corners or key holes (slits) becoming wider that normal?
Does the wooden roof deck appear rotten or delaminated under the last row of shingles?
Are there any roof vents visible?

III. Foundation
a. STRUCTURAL
Is the home's construction frame, concrete block or modular?
Check for cracks, flaking or damaged masonry. Look for cracks in the foundation that run lengths from wall to wall, especially when part of the building is sinking.
Note any water markings and soft mortar.
Any bowing, bulging or other irregularities?

IV. Floors
a. Check for deteriorated coverings or cracked ceramics.
Any water staining or other damage?
Sloping or sagging?

V. Walls
a. Randomly sample to check that the windows and doors work.
Are the walls straight vertically and horizontally?
Look for cracked or loose plaster.
Look for stains, physical damage or previous repair evidence.
Any drywall seams or nails showing?

VI. Ceilings
a. Check for cracks in the plaster or loose, sagging plaster.
Look for stains, mechanical damage or evidence of previous repair.

VII. Bathrooms & Kitchens
a. Check that all fixtures are secure.
Are there any cracks in the fixtures?
Note the condition of the tiles and caulking in the tub/shower area.
Are the faucets working? Do they leak? Sufficient water pressure?
Was the home winterized?
Look for staining and rot under the counter-tops.
Randomly sample the operation of the cabinet doors and drawers.

VIII. Basements
a. A crack in a concrete block basement wall, which is considered a weaker wall compared to a poured concrete wall, is usually caused by water damage. It will be located horizontally along the mortar joints.
b. If there is a visible straight line on the wall that is parallel to the floor, this is an indication of a flood.

IX. Plumbing
a. If you purchase property in a state where temperatures are at freezing during the winter, you must make sure the home has been winterized. This removes all of water from the pipes in an attempt to prevent busting or breakage. If you a buying a home that was vacant throughout the winter, you will want to see if the pipes froze and busted during the winter. Indicators of broken pipes are cracked toilets; turning on a spicket and having water run out; or seeing a running meter even though the faucets are all off. This means there is a leak due to a busted pipe.

X. Water Heater
a. visibly inspect the bottom of he water heater to look for rust.

MVL is a consultant with http://www.lmgrei.com and is an avid real estate investor. The site offers investment properties online and real estate consulting.