Did My Tenants Ruin This Property? First Walkthrough After a Sight-Unseen Buy

TLDR
I bought this duplex sight unseen. My property management team warned me it might be bad. The first walk suggested about $40,000 across both units, and most of the problems came from deferred owner maintenance, not the tenants.

Table of Contents

Why I Buy In Growth Neighborhoods

You can buy houses in a more established neighborhood. I described that path as steadier and often lower headache. That is the strategy for a lot of people.

I buy in growth neighborhoods because I am looking for a lower purchase price relative to rent and the possibility of neighborhood appreciation. Those are tradeoffs I pursue, not guarantees. A rough rent-to-price screen is not the same thing as a full cap-rate calculation or a promise of future cash flow or equity.

I am a full-time investor. I kind of bought the job of having headaches. So I buy in growth neighborhoods on purpose.

The lower the price, the higher the cap rate, the more the headaches. Pick your tradeoffs on the front end.

Unit One: Better Than I Expected

I walk in and it smells like a rent house. Not a new house. A rent house. That should tell you how the day is going to go.

I called a little mold on the quarter round topical during the walk and planned to remove it with the trim when the floors came out. That first impression still needed to be checked once the material was opened. Electric heat was working. The floors felt solid, which was a good sign and gave me no reason on that walk to plan subfloor work. The burners on the stove worked. The cabinets were usable, so I planned to paint them and add handles.

There are exposed fixtures without covers. You cannot rent a house to a family with light fixtures that have exposed bulbs where a kid can reach them. That is one of the safety and liability items that is not negotiable.

The scope for this side is pretty tight:

  • New flooring throughout
  • Paint everything
  • New light fixtures with covers
  • plumbing caulk and seal so water does not get where it should not
  • Paint the kitchen cabinets
  • Replace a stove burner

I am calling this one a $10,000 to $15,000 turnover.

Unit Two: The Worse Side

Different smell on the other side. Cigarette smoke, mildew, rat poop, general musk. It is worse.

There is a potential leak in the roof. Staining on the ceiling. From inside, I first wondered whether the roof was newer. The exterior walk changed that assessment: it was definitely old. The next step was to find the source and decide the scope instead of assuming a patch or replacement from one interior stain.

The base cabinets are eaten up. The countertops are crappy. I was going to just paint them like the other side, but I think it is cheaper to put in new base cabinets and countertops. I will reuse the sink. Take the uppers down and put new ones in. I might do the same thing on the other side now that I think about it.

I saw electrical work I believed needed correction and gaps where water was getting in. The plan was to have the trades inspect those conditions and seal the openings.

So this side is floors, paint, cabinets, countertops, electrical repairs where needed, a stove, and a refrigerator. I expected it to cost a little more than the first side, with about $40,000 across both units.

Dumb Mistake
Do not lock the kitchen scope from the doorway. In the source, I changed my cabinet plan as I inspected the damage and then reconsidered the other unit. The first walkthrough is where the blurry scope starts getting sharper.

The Slum Lord Line

A lot of people say anybody with a rental in a growth neighborhood is a slum lord. I think that is lazy.

The line is simple. You are a slum lord if you ignore safety and liability items. Exposed electrical a kid can touch. Broken glass. Windows that will not open in a bedroom so a fireman cannot get in. Fire alarms that chirp because the battery is dead and you never replace them.

My line in this lesson is to handle the safety and liability issues and provide livable, affordable housing. The finishes do not have to imitate a high-end flip. They should match the scale of livability the rental actually needs.

Safety and liability come first. Finish decisions come after that.

Outside: Roof, Gutters, Crawlspace

Exterior is the part most people skim. It is where a property gets quietly destroyed over years.

  • Gutters. I wanted gutters added to get water away from the property. The source gives no price, layout, or exact downspout distance.
  • Fascia paint. Raw fascia rots. Painted fascia lasts.
  • crawl space door. The door and the open area beside it needed to be closed and patched.
  • Window unit opening. I first said to fill the gap if no unit belonged there. After checking the building, I decided this room needed a window unit that fit the opening.
  • Storm doors and railings. Broken spindles where a kid can fall through are safety items, not cosmetic.

The crawl space on this property was Blair Witch. Not a joke. I needed to patch a hole where breaking through the drywall from the crawl side would put you inside a bedroom.

Pro Tip
On rentals, always look at what is actively bleeding. Live leaks, live water entry, live rot. You fix what is actively causing damage first, then you worry about cosmetic.

Did the Tenants Ruin It?

No. By the end of the walk, I said most of the problems came from the person who sold me the property, not the tenants. The prior owner had not kept up with basic maintenance. The chirping fire alarms were the clearest example.

The units were outdated and needed work, but they were not the collapsed floors, major cleanout, active mold, and widespread leaks I expected from a bad sight-unseen turnover. The title asks the question; the walkthrough’s answer is deferred owner maintenance.

The Numbers

I expected each side to rent for $1,200 to $1,300 a month. Using $2,600 total and the 1 percent rule, I called $260,000 a rough screen in the recording. That shortcut was not an appraisal or a complete valuation.

I bought it for around $130,000. If I put $10,000 to $15,000 into side one and a bigger number into side two, plus exterior work, I am around $40,000 total in renovation. That put my rough basis near $170,000 against the $260,000 screening number.

That left a large gap between my rough all-in basis and my rough value screen. The initial walk made me happy with this deal; it did not prove the final renovation cost, rent, or value.

This sight-unseen buy had enough room for the problems I saw on the first walk. It is one result, not a rule that makes sight-unseen buying safe.

FAQ

Should I buy rentals sight unseen?

This was a sight-unseen purchase whose low basis gave me room for the repair scope I found. The source is a walkthrough of that result, not a universal test for another sight-unseen purchase.

How do I know a growth neighborhood from a bad neighborhood?

I pointed to a flipped house and another house with permits and active work as signs of investment on the street. This walkthrough does not turn those two observations into a general neighborhood checklist.

What’s the first thing you check on a turnover walkthrough?

I was encouraged that the floors felt solid. That did not prove the condition of every hidden part. Softness or slope is a reason to investigate further, not a diagnosis by itself.

Can I skip gutters on a rental?

I wanted gutters on this building to get water away from it. Get the actual gutter and downspout scope for the building; this walkthrough gives no price.

Is painting cabinets as good as replacing them?

I planned to paint the cabinets that still looked usable and replace the damaged base cabinets and counters on the worse side. The condition and bids decide which option costs less.