Due Diligence Checklist: What to Inspect Before Buying Investment Property
What to check on a walkthrough, when to call inspectors and specialists, Texas option periods and wholesale deal timelines, and how to price in what you find before you buy.
Due diligence is the work you do between signing a contract and committing your money. Done well, it turns surprises into line items you can price. Skipped, it turns them into losses: a cracked foundation or a failed sewer line found after closing can wipe out the profit on a flip.
This checklist covers what to look at yourself, when to bring in professionals, and what to do with what you find. It's written for Texas investors, including those buying from wholesalers.
Not under contract yet? Browse wholesale deals in Texas and come back to this list when you find one worth a closer look.
Why it matters: what common problems cost
Rough repair ranges you'll see on older Texas houses (your market and the house will vary):
| Problem | Typical range |
|---|---|
| Foundation repair | $5,000 to $30,000+ |
| Roof replacement | $8,000 to $20,000 |
| HVAC replacement | $6,000 to $15,000 |
| Sewer line repair or replacement | $3,000 to $15,000+ |
| Rewiring or panel replacement | $2,000 to $20,000 |
| Mold remediation | $2,000 to $15,000 |
One of these, missed, can turn a good deal into a break-even one. Two can turn it into a loss.
Know your timeline first
How much time you have depends on how you're buying.
Standard Texas contract (TREC form). Most Texas residential contracts include an option period: you pay the seller a small option fee for the right to back out for any reason within a set number of days, often 5 to 10. That window is when your inspections happen. If you terminate in time, you generally keep your earnest money. Miss the deadline and that protection is gone.
Buying from a wholesaler. Assignment deals often move faster and give you less room. Some wholesalers allow a short inspection window; others expect you to close as-is with non-refundable earnest money. Ask before you sign:
- Can I get inside before I commit, and for how long?
- Is my earnest money refundable, and under what conditions?
- When is closing, and who is the title company?
Our guide on questions to ask a wholesaler covers this in more detail. If there's no inspection window, do your walkthrough before you sign and price in what you can't see.
This is general information, not legal advice. Have a Texas real estate attorney review any contract you're unsure about.
Step 1: Your own walkthrough
Do this before you make an offer, or as early as you can. The goal is to spot deal-breakers and big-ticket items, not to replace a professional inspection.
Bring: a good flashlight, an outlet tester (about $10), a moisture meter (about $25 to $50), a level or a marble, a tape measure, and your phone for photos and notes.
Outside
- Foundation. Cracks in brick or mortar, especially stair-step cracks; gaps around window and door frames; a slab edge that's visibly cracked or sloped.
- Roof. Missing or curling shingles, sagging lines, patched areas. Ask the age. From the attic, look for daylight or water stains on the decking.
- Drainage. Ground should slope away from the house. Look for standing water, erosion, or downspouts dumping against the foundation.
- Siding and trim. Rot, peeling paint, soft wood, gaps where water or pests can get in.
- Trees. Large trees close to the house can mean root problems for the foundation and sewer line.
Inside, room by room
- Floors. Slopes or bounce. Set a marble down in a few rooms.
- Doors and windows. Doors that stick or won't latch, and windows that won't open, can point to foundation movement.
- Walls and ceilings. Cracks running from door and window corners, water stains, fresh paint in just one spot (sometimes a cover-up).
- Kitchen and baths. Leaks under sinks, soft floors around toilets and tubs, water pressure, drains that run slow, exhaust fans that work.
- Smells. Musty air suggests moisture or mold. A sewer smell suggests drain or vent problems.
Major systems
- HVAC. Run both heat and AC. Check airflow and the data plate for the year it was made. In Texas heat, units often last 10 to 15 years.
- Electrical. Test outlets in each room and check for GFCI protection in kitchens, baths, and outside. Open the panel door and note the brand, rust, and any scorch marks.
- Plumbing. Water heater age (on the label), visible pipe material, signs of past leaks.
- Attic. Insulation depth, ventilation, water stains, signs of pests.
Step 2: A professional inspection
A general home inspection by a licensed Texas inspector typically runs $350 to $700 depending on size, and the report usually arrives within a day or two. Inspectors in Texas use a standard state report form, so reports are easy to compare.
The inspector covers structure, roof, grading and drainage, electrical, plumbing, HVAC, appliances, and visible signs of water damage. They will flag issues but won't usually price them. Get contractor bids on anything significant before your option period or inspection window ends.
Step 3: Specialists when something's flagged
| Specialist | When to call one | Typical cost |
|---|---|---|
| Structural or foundation engineer | Cracks, sloping floors, sticking doors, or any prior foundation work | $400 to $800 |
| Sewer scope | Older home, big trees nearby, slow drains, or cast iron or clay pipes | $150 to $350 |
| Termite (WDI) inspection | Almost always in Texas | $75 to $150 |
| Roofer | Roof over 15 years old, or visible damage | Often free |
| HVAC technician | System over 10 years old, or not cooling well | $100 to $200 |
| Electrician | Older panel brand, aluminum wiring, or DIY wiring | $100 to $300 |
| Mold assessor | Visible growth, musty smell, or a history of leaks | $300 to $600 |
Problems that change the math
Some findings are walk-away issues for most investors. Others are fixable, as long as the price reflects them.
Usually serious:
- Major foundation movement that needs an engineer's repair plan
- A collapsed or badly damaged sewer line
- Extensive water damage or mold through much of the house
- Active flooding history in a high-risk flood zone
- Unpermitted additions that may need to be removed or brought to code
Fixable, but price them in:
- Older electrical panels known for problems (such as Federal Pacific or Zinsco), or aluminum branch wiring
- Galvanized or polybutylene supply pipes
- An old roof, HVAC system, or water heater near the end of its life
- Lead-based paint, which is common in homes built before 1978. Contractors working on it must follow lead-safe practices, and sellers and landlords must disclose it.
- Asbestos in older flooring, ceiling texture, or duct wrap. It's often fine left undisturbed, but removal during a rehab adds cost.
The question isn't "does the house have problems?" Every investment property does. The question is whether the price still works once you've added realistic costs for what you found.
Texas-specific checks
- Foundations. Expansive clay soils across much of North and Central Texas and the Houston area make foundation movement common. Ask whether there's been past repair work and whether a transferable warranty exists.
- Flooding. Look up the address on the FEMA flood map, ask about past flooding, and get a flood insurance quote before you close. A home in a high-risk zone can carry insurance costs that change your numbers.
- Termites. Common across the state. Look for mud tubes and damaged wood.
- HVAC. Long, hot summers wear systems out faster than in milder climates.
- Property taxes. Look up the current tax bill and remember it may go up after a sale or renovation.
Questions to ask the seller (or wholesaler)
- How old are the roof, HVAC, and water heater?
- Has there been any foundation repair? Is there a warranty?
- Has the property ever flooded or had a water leak?
- Was any work done without permits?
- Are there any liens, code violations, or HOA issues?
- Is the property occupied? If so, by whom, and on what terms?
How someone answers, and what they avoid answering, tells you a lot.
Document everything
Take photos and video of every room, all damage, the electrical panel, HVAC and water heater labels, the roof, the attic, and the outside of the foundation. They're useful for contractor bids, for negotiating, and later as a before-and-after record.
Negotiating after inspection
Once you know what you're dealing with, you have a few options:
- Ask for a price reduction. Usually the cleanest choice for investors, since you control the repairs.
- Ask for a credit at closing. Similar effect, though lenders may limit how much they allow.
- Ask the seller to make repairs. Less common with investment property, and quality is hard to control.
- Walk away. If you're still inside your option period or inspection window, this may cost you only the option fee.
With wholesale deals, price is often less negotiable, which makes your walkthrough and your own repair estimate even more important.
When to walk away
- Repairs come in far above your budget and the seller won't adjust the price
- The deal no longer works once you rerun your ARV and repair numbers
- Too much is unknown and you can't get answers before your deadline
- Something about the deal or the seller doesn't add up
Losing an option fee, or even earnest money, costs far less than owning the wrong house.
Due diligence checklist
- Confirm your timeline: option period, inspection window, and earnest money terms
- Do your own walkthrough with a flashlight, outlet tester, and moisture meter
- Order a general inspection
- Bring in specialists for anything flagged, and get a termite inspection
- Check the flood map and get an insurance quote
- Get contractor bids on major items
- Rerun your numbers with real costs
- Negotiate, proceed, or walk away before your deadline
The bottom line
Every investment property has problems. Due diligence is how you find them while you can still do something about it, by pricing them in, negotiating, or walking away.
On PropPipeline, listings show the wholesaler's repair estimate, ARV, and asking price, and you can message the wholesaler directly to ask about access and inspections. Browse deals in Dallas–Fort Worth, Houston, or all of Texas. New to buying from wholesalers? Start with how to buy wholesale real estate in Texas.