Due Diligence Checklist: What to Inspect Before Buying Investment Property
Skipping due diligence costs tens of thousands in unexpected repairs. Use this room-by-room inspection checklist to catch problems before you buy.
Due Diligence Checklist: What to Inspect Before Buying Investment Property
Due diligence is the difference between a profitable deal and a money pit.
Skip it, and you'll discover $30K in foundation issues after you close.
Here's the complete inspection checklist that protects your investment.
Why Due Diligence Matters
Cost of mistakes:
- Foundation repair: $10K-$50K
- Roof replacement: $8K-$15K
- Plumbing/electrical: $5K-$20K
- Mold remediation: $3K-$15K
- HVAC replacement: $5K-$12K
One missed issue can kill your profit.
The 3-Phase Inspection Process
Phase 1: Initial Walkthrough (You)
Timeline: Before making offer
Goal: Spot obvious deal-breakers
Phase 2: Professional Inspection
Timeline: During due diligence period
Cost: $300-$600
Goal: Catch hidden issues
Phase 3: Specialist Inspections (If Needed)
Timeline: After general inspection
Cost: $200-$1,000 each
Goal: Verify major concerns
Your Initial Walkthrough Checklist
EXTERIOR
Foundation:
☐ Visible cracks (>1/4 inch = concern)
☐ Settling/uneven floors
☐ Doors/windows stick
☐ Gaps between walls and ceiling
☐ Cracks in brick/mortar
Roof:
☐ Missing/damaged shingles
☐ Sagging areas
☐ Age (ask seller)
☐ Visible water damage
☐ Gutters intact
Siding/Paint:
☐ Peeling paint
☐ Rotting wood
☐ Damaged siding
☐ Water stains
Grading/Drainage:
☐ Water slopes away from house
☐ No standing water
☐ Gutters/downspouts functional
INTERIOR - ROOM BY ROOM
Kitchen:
☐ Cabinet condition
☐ Countertop damage
☐ Appliance age/function
☐ Plumbing leaks (under sink)
☐ Electrical outlets work
☐ Flooring condition
Bathrooms:
☐ Toilet flushes properly
☐ Sink drains quickly
☐ Shower/tub condition
☐ Water pressure
☐ Grout/caulk condition
☐ Ventilation fan works
☐ Signs of water damage
☐ Floor soft spots (water damage)
Bedrooms:
☐ Flooring condition
☐ Walls (cracks, holes)
☐ Windows open/close
☐ Closet doors work
☐ Electrical outlets
Living Areas:
☐ Flooring (carpet, tile, wood)
☐ Ceiling (stains, cracks)
☐ Walls (damage, mold)
☐ Windows (drafts, broken seals)
☐ Doors (operation, damage)
MAJOR SYSTEMS
HVAC:
☐ Turn on heat and AC
☐ Check airflow from vents
☐ Ask age of system
☐ Filter condition
☐ Strange noises/smells
Electrical:
☐ Circuit breaker panel (rust, age)
☐ Outlets work (test each room)
☐ Lights function
☐ GFCIs in bathrooms/kitchen
☐ Visible wiring issues
Plumbing:
☐ Water pressure (multiple faucets)
☐ Hot water heater age/condition
☐ Visible leaks
☐ Drains flow properly
☐ Toilet flush power
☐ Sewer smell
Attic:
☐ Insulation condition
☐ Ventilation adequate
☐ Roof decking visible damage
☐ Water stains
☐ Pests/droppings
Red Flags That Should Stop You
Immediate Deal-Killers:
❌ Foundation:
- Major structural cracks
- Significant settling
- Requires engineering report
❌ Roof:
- Needs immediate replacement
- Active leaks
- Structural damage
❌ Mold:
- Extensive black mold
- Throughout property
- Remediation >$10K
❌ Electrical:
- Knob-and-tube wiring
- Federal Pacific panels
- Aluminum wiring (fire hazard)
❌ Plumbing:
- Polybutylene pipes (insurance issue)
- Main sewer line collapsed
- Galvanized pipes throughout
❌ Environmental:
- Asbestos throughout
- Lead paint (pre-1978 homes)
- Contaminated soil
If you see these, walk away—unless you're experienced and price accounts for them.
Professional Inspection Priorities
What Inspectors Check:
- Structural integrity
- Roof condition
- HVAC functionality
- Electrical safety
- Plumbing systems
- Foundation
- Insulation/ventilation
- Windows/doors
- Appliances
- Grading/drainage
Report timeline: 24-48 hours
What to do: Review thoroughly, ask questions, negotiate repairs
When to Get Specialist Inspections
Foundation Engineer ($400-$800)
When: Cracks >1/4 inch, uneven floors, sticking doors
Structural Engineer ($500-$1,200)
When: Sagging roof, major settling, renovations planned
Mold Inspector ($300-$600)
When: Visible mold, musty smell, water damage history
Sewer Scope ($150-$300)
When: Old home, tree roots nearby, slow drains
Roof Inspector ($200-$400)
When: Roof age >15 years, visible damage
Chimney Inspector ($150-$300)
When: Fireplace present, will be used
Termite Inspection ($75-$150)
When: Texas property (always get one)
Texas-Specific Concerns
Foundation Issues
Why: Expansive clay soil
Check: Cracks, pier and beam condition
Cost: $5K-$50K to repair
Termites
Why: Humid climate
Check: Wood damage, mud tubes
Cost: $500-$3K treatment, $3K-$15K damage repair
HVAC Lifespan
Why: Extreme heat/cold
Check: Age (dies faster in Texas)
Cost: $5K-$12K replacement
Flooding
Why: Flash floods common
Check: FEMA flood maps, insurance rates
Cost: Can't insure or very expensive
Questions to Ask the Seller
- How old is the roof?
- When was HVAC last serviced/replaced?
- Any foundation work done?
- Any flooding history?
- Age of water heater?
- Any unpermitted work?
- Why are you selling?
- What repairs have you done recently?
- Any neighborhood issues?
- Are there any liens or title issues?
Their answers (or evasions) tell you a lot.
Document Everything
Photos to Take:
- Every room (multiple angles)
- All damage/concerns
- Electrical panel
- HVAC system
- Water heater
- Foundation (exterior)
- Roof condition
- Attic
- Crawl space/basement
Why:
- Reference during renovation
- Insurance claims
- Contractor estimates
- Proof of condition
Negotiating After Inspection
Options:
1. Seller repairs before closing
Pro: Fixed before you own
Con: Quality control issues
2. Price reduction
Pro: You control repairs
Con: Need cash for repairs
3. Credit at closing
Pro: Lender may allow
Con: Reduces loan amount
4. Walk away
Pro: Avoid money pit
Con: Lost time/earnest money (if outside due diligence)
Due Diligence Timeline
Day 1-3: Initial walkthrough, make offer
Day 4-7: Schedule professional inspection
Day 8-10: Review inspection report
Day 11-14: Specialist inspections (if needed)
Day 15-20: Negotiate repairs/price
Day 21: Decision deadline (typically)
Most contracts: 10-20 day due diligence period
Use every day—don't rush.
DIY Inspection Tools
Bring to every walkthrough:
- Flashlight (inspect attic, crawlspace)
- Outlet tester ($10 at hardware store)
- Moisture meter ($20-$50)
- Tape measure
- Level (check floors)
- Notepad/phone for notes
- Camera
Cost to Expect
Typical due diligence costs:
- General inspection: $300-$600
- Termite inspection: $75-$150
- Sewer scope: $150-$300
- Specialist inspections: $200-$800 each
Total budget: $500-$2,000 depending on property
Worth every penny—prevents $10K-$50K mistakes.
When to Walk Away
Sometimes the best decision is no deal.
Walk if:
- Repair costs exceed budget by 30%+
- Deal no longer profitable after inspection
- Seller won't negotiate on major issues
- Too many unknowns/risks
- Your gut says something's wrong
Better to lose earnest money than buy a money pit.
The Bottom Line
Due diligence protects your investment.
✅ Never skip it
✅ Hire professionals
✅ Document everything
✅ Negotiate or walk
PropPipeline wholesalers often provide inspection reports with their listings—saving you time and giving transparency upfront.
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