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Is There Time for a Quickie? - Part 2
by Kevin Smith
This is the second part of a three-part article on how to size up a property in a hurry without getting into trouble. The first installment of the article talked about doing a quick once over assessment of the property, and then focusing in on the three most expensive repairs that houses call for. Again, the three big dollar repairs are the foundation, the roof, and the HVAC system. These are the most cost intensive single items that you will have to deal with as a rehabber. There may be other considerations, such as having to remove and replace all of the siding on a house, but these three are the top budget items for investors.
You can learn to look at houses and make rational, meaningful assessments of the conditions and the repair costs just the same as you can learn to fly an airplane, analyze a financial statement, or get on the Internet. This is just sticks and bricks, not brain surgery, so read on and learn now.
Roofing is an area where a lot of new potential investors get tripped up when they work up their scope of work and budget for the property before buying it. They get out of the car, look up at the top of the house, and say; "Yep, it's got a roof all right, now what else do I look at?" It hurts my stomach to think of investors doing that. You can go wrong several thousands of dollars by missing a roof, and remember, that money comes right out of your refrigerator in the long run. Let me see if I can help you get stronger.
Look at the overall condition of the roof for obvious signs of the roof having "reached the end of its life expectancy". Are the shingles deteriorated to the point where they are sloughing off of the house? Are there bald spots on the shingles where the granular material has long since let go and washed into the gutter? Are there shiny spots on the shingles, or spots where you can see the fabric of the fiberglass matting on the face of the shingles? Do the edges of the shingles shine in little outlines of the shingle? This is caused by the edges of the shingles literally wearing away over years and exposing the fiberglass matting inside the shingle.
Look for signs of abrasive damage caused by tree limbs whether the branches are still there or not. Some folks will tidy up the property just before they sell it, but will often leave the evidence in plain sight. If you can get up on a ladder and see the surface of the shingle, look for hail damage. Hail damage looks like acne on the shingle, pock marks where the little ice balls come out of the heavens and strike the roof with such force that it literally bangs the aggregate (that sand on the shingle) right off the shingle. Have a good look around the neighborhood, and if you see more than one or two new roofs, you should ask about the hailstorm and if the insurance company has come out.
By the way, if a homeowner's policy was in force at the time of the hail storm, and the owner did not yet not make a claim, you may be able to recoup some or all of the cost of the roof replacement through the seller's insurance company. Talk to your insurance man, a public adjuster, or the seller.
New shingles have nice square cut corners and straight, parallel slots called rain lines. As the roof ages, the corners will eventually become rounded, and the once parallel slots will begin to look like an inverted "V". These are signs of a roof that needs to be replaced. Another sign of a bad roof is what they call "chicken feathers", because the shingles are cupped and curl down under themselves to look like the odd feather sticking up on a chicken. If you see these conditions, the roof is bound for the landfill. Period.
If you see a roof that is made of wooden shingles, be very careful, this is an older roof for sure. You can't put a wood shingle roof on in the city of Houston any more. The fire department says so, and they have for years now. Oh, you can get a kind of wood shingle that has been treated with fire retardant, and the City of Houston will grudgingly accept it, but no builder or architect in his right mind will put one on. Want to see one of these treated wood shingle roofs? Want to see chicken feathers? Go to Bellaire and Rice and look at the roof on the little bandstand there that used to be a trolley station back in the days. The roof looks like homemade crap because of the wood shingles curling up.
Multiple roofs mean that you will have to pay more to the roofer because he will have more labor to remove it, and he will have to pay more to dump it in the landfill. I have seen as many as six roofs on a house, and it puts a severe strain on the wooden framing on the house (it wants to spread the walls out at the top), and it can also have a negative impact on the foundation of the house as well.
Look for lumps in the flat roof areas, or look at the edges of the roof as it runs up towards the peak. If you get on your ladder and examine the edges of the roof by picking up a shingle and gently raising it, you can usually tell if there is more than one roof there.
Before you go inside, look at the fascia and the soffit. The fascia is the part of the eave of the house that is vertical. It is the part we nail gutters to. The soffit is the part of the eave that is parallel with the ground. When the gutters back up and run over, the fascia and the soffit are often damaged because the space between the gutter and the fascia fills up like a purse full of water. The water promotes the growth of certain bacteria and other organisms, and these organisms cause wood rot.
Inside the house, look for stains on the ceilings. Go into the attic to see what is above the stain. Sometimes the stain comes from a problem with the air conditioner; sometimes it comes from a leak at the flashing, a leak at a roof penetration (where the pipes or the chimney go through the roof) or a leaking valley in the roof structure.
Very important to remember when you look in the attic is to take a good look at the bottom part of the roof that you see from inside the attic. Do you see plywood, or do you see 1 X 4 boards running left to right with wood shingles running up and down? If there is a wood shingle roof on a house that has to be replaced, you will go from an industry average of about $85 to replace 100 square feet of roof to $150 or $175 per 100 square feet, because you now have to remove that wood roof in little pieces, and then you have to make a plywood deck all over the roof to put the new shingles on.
A wood shingle roof means a 40 to 60 percent increase in the cost of replacing the roof, because they have to tear everything off to the rafters and begin with plywood decking before they can put the felt paper and shingles on it to make the new roof system.
All of this can be done successfully in a rehab. I've replaced hundreds of roofs here in the Houston area. The thing I want you to be aware of is that you have to figure repairs like this into the cost of bringing the house to a good and marketable condition. This means adjusting your offering price accordingly, and it is done every day.
That's all for this month. Next month we'll finish with the rest of how you do a quickie inspection and talk about heating and air conditioning, and other holes that you throw money into in a house. You can call me at 713-858-1330 if you have questions, there's never a charge for talking on the phone. I'm Kevin Smith, and I'll see you out on the property.
Kevin Smith, Professional Inspector
Kevin Smith of Forward Assist is a well-respected professional inspector with hundreds of investment properties inspected every year. Kevin has conducted "Mr. Fixit" workshops and served on the Board of Directors at the RICH club. He shares his treasure chest of secrets with anyone who asks. You can reach Kevin at (713) 858-1330.