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Fred Dunfy and his fiance, Gina Frappolli, had their eyes on a house in Florence, N.J. The house fronted the Delaware River and would give them a home and a rental at the same time. The top floor had been converted to a one-bedroom apartment. On the main floor, Dunfy and Frappolli would have two bedrooms, living room, kitchen, bath and access to a basement. Despite the location and the accessory dwelling unit on the top floor (see REAL PROFITS, May 2000), they had their doubts.
I thought it was going to require major repairs," Dunfy says. Friends advised an inspection. They called Michael Kuhn, owner of a HouseMaster Inc. franchise. In 13 years, Kuhn has eyeballed more than 6,000 houses.
The verdict? "The inspection found a few things," Dunfy says. "But it wasn't enough to scare us off." For his $300 fee, Kuhn found outdated wiring, a heater at the end of its 20-year life expectancy and no access to a crawl space--something Dunfy wanted.
For their $300 payment, Dunfy and Frappolli got peace of mind. "I feel 100 percent comfortable about the house now," Dunfy says. Some investors may be familiar enough with buying and repairing property to assess an older home purchase, but most should hire an inspector, Kuhn says. Certified inspectorsSeven states require certification for inspectors, which is also required for membership in the American Society of Home Inspectors. To find an inspector near you, go to the ASHI Web site (www.ashi.com/fi.cfm). ASHI inspectors are required to advise buyers on how to act on identified problems, which can be considerable, depending on the age of a property. Despite people's affection for older homes, they are seldom better investments than brand-new properties. "That's a fallacy, that 'they don't build them like they used to,'" says Mark Cramer, an inspector in Indian Rocks Beach, Fla., and president of the ASHI. "We build them better today." Oh, sure, the craftsmanship may have been more loving, the wood of better quality. But foundations were often inferior, beams and joists weren't as well engineered, wiring wasn't adequate for modern demands, insulation was lacking, heating and cooling systems weren't as efficient, and galvanized steel pipe tends to suffer from age related arterial blockage. "For investors, I would say stay away from old houses--anything before 1960," Cramer says. Inspections serve a couple of key purposes. The inspector may help the buyer negotiate a fair purchase price. Beyond that, an inspection will point not just to the skeletons in the closet, but also the ghosts--"problems that the seller isn't aware of," Cramer says. Here is what buyers might expect, by structural age:5 years: The house has settled. Foundation or structural problems will show. Small problems should have surfaced and been repaired. If a septic system serves the house, make sure it is adequate for the intended rental occupancy. 6-10 years: If the home has improper ventilation, moisture problems may begin to show. "Condensation from improper ventilation is the biggest cause of damage," Cramer says. Kitchen appliances and the hot water heater are nearing the end of their life expectancies. 15 years: The roof is five years from replacement. Seals may have broken on double-pane windows, causing fogging. Driveways and decks are weathering. "If it's the original hot water heater, count your blessings," says Kuhn. Air-conditioning systems may be limping along. 20-25 years: If the roof, heating system and hot water heater haven't been replaced, the buyer should consider that looming cost. 30 years: Check for aluminum wiring. Upgrading outlets to avoid fire hazards could run around $2,000 in an average-size house. 40-50 years: The house may have been reroofed over the original. Many locales allow only two roofs, so a new roof would require removal of old roofing--at about 50 percent more expense. "This is also when you get problems with plumbing," Cramer says. "Galvanized pipe tends to get a buildup of minerals on the inside, reducing water flow." 50-70 years: Galvanized drainpipes will corrode and split after this much time. Replacement can be costly, Cramer says.
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