So you understand the construction of the home you are looking to purchase, including its foundation. The next step is to analyze the property from a liability standpoint, assessing potential safety concerns and budgeting to fix them as part of your initial investment.
7. Look out for safety issues.
For anyone looking to purchase a rental property, I always recommend a home inspector. An excellent value for the money, a licensed home inspector can help to identify potential safety and maintenance issues and even provide ballpark estimates for correcting these. I would personally never purchase an investment property without consulting one, as too many potential dangers lurk within and behind the walls which can turn your House Beautiful into The Money Pit.
Radon, lead paint, asbestos and mold are four primary concerns, as they pose significant health risks and can be expensive problems, requiring specialists to remediate. My insurance company will not even insure a property which it believes to have lead paint, and I’ve been hearing reports lately about local code officials doing tests which penetrate the top layers of paint to reveal any presence of lead below. It’s no longer sufficient to paint over lead paint — it must be removed in its entirety. Houses built before 1978 are likely to contain lead paint, so pay special attention to these. You can get more information from the EPA website.
And while you may have the choice to live in a residential property with one or more of these issues, rental properties are a different story. Your local municipality may refuse to allow you to rent a property without correcting these issues.
As a landlord, there are certain things you need to pay special attention to in order to prevent potential lawsuits. These include:
* Exterior stairways without handrails or where ice/snow/rain may cause a slip hazard
* Steep steps
* CO and smoke detectors (fire hazard)
* Obstructed doorways or exits (fire hazard)
* Broken windows/glass
* Cracks or unevenness in sidewalks, driveways, or walkways (trip hazard)
* Open electrical circuits, outlets or wires (electrocution hazard)
* Unfenced swimming pools (drowning hazard)
* Lack of GFI outlets near kitchen/bathroom water facilities (electrocution hazard)
Most issues will need to be corrected prior to tenants moving in. However, for conditions which become hazardous as a result of inclement weather, you will need to either install material to increase traction or develop an action plan so that ice and snow are not allowed to build up in these areas.
As a rental property owner, you have an increased risk of lawsuits overall, so safety is a primary concern, but accidents still happen. Owners often choose to limit their personal liability risk by establishing each property as its own LLC. It is advisable to consult a lawyer to ensure that your other assets will be protected in the event of a lawsuit.