Welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. And I am glad to have you back. You know, this topic of home inspections should not be a boring one. I know on the surface, it might appear that way, but you need to know as much as you can about home inspections. Clearly, I think it's obvious that the importance of a home inspection does not need to be stated. In fact, we have a policy that all the, uh, clients, all of the investors that we talk to and work with must order a home inspection when they're purchasing investment property, regardless of what it is, including new construction. But you know, a lot of people misunderstand what an inspection is supposed to contain, what it should cover and should not cover. What is the breadth or scope of that inspection? How do you even find a good home inspector?

Well, these are all good questions and I've jotted down many others that we're going to ask and discuss with my guest today, who will be on here in half a minute, but you know, just real quick here, you know, why should you get a home inspection? Well, there's many reasons off the top of my head. It, you know, if you're doing due diligence on property and you need to make sure that you are not getting yourself into trouble or purchasing a lemon, it essentially provides you an out. There's always a contingency in every purchase agreement. It's a due diligence period. And within that due diligence period, you can order an inspection. And if it doesn't come back to your satisfaction, which is not a quantifiable description, it's more qualitative than quantitative, but it gives you an out to get out of that contract, get out from under it and just have your deposit returned if you have a deposit on it.

So it gives you a contractually legal way to get out of a contract. So there's that, of course, safety reasons. You wanna make sure that you don't have issues at the property like raydon or mold or carbon monoxide. So, you know, you wanna make sure that there are no safety issues. In addition to that, it may be able to point out if there are any illegally built additions or installations to the property. Maybe there was something that was built, some sort of extension or addition room that does not fall under code, or maybe there was never a permit issued for it. So you should be aware of that as a side, the, uh, seller should and is supposed to disclose that information to you. But you know, that's another thing is just to reveal any illegal additions. It's a negotiating tool. I mean, if there are issues that need to be solved or cured, it allows you to negotiate and bargain either a credit or a reduction in the price, or just have the seller cure those issues that are red flags or must be done items.

It gives you the ability to forecast future costs. If you have an idea of the wear and tear of various things in the property, then you can forecast what some of your renovations or capital expenditures might be in the future. So it's good to know what the shelf life is of various component in the property. That inspection could be the deal breaker type of document that you need to say, well, no, this is just too much to fix. I don't want to credit on anything. So, you know, it's just a no go. Deal's not gonna break now. We never have that situation. I shouldn't say never, probably one out of every 300 properties has an in come back and the report is essentially a deal-breaker. There's just too much there to wrap your head around. But like I said, it's, it's very rare that that actually comes up.

So other than that, you know, the final thing, but this is certainly not the last thing. Uh, but the final thing that I wanna mention here is insurance. I mean, no insurance company, will I a property if there are various issues there. So it's basically like a clean bill of health. And, uh, as long as the, uh, inspection passes through your criteria and the insurance company's crite...