Red Flags To Watch For When Evaluating A Rental Property

By 4 min read • February 8, 2024
Red X with wooden house in background

Buying a rental property can seem like a smart investment on paper. However, hidden issues that are overlooked upfront can end up costing owners far more down the road in repairs and maintenance. As an investor, you want to avoid buying a “money pit” rental filled with expensive problems.

That’s why it’s critical to carefully evaluate any prospective rental purchase and watch out for red flags. Some problems are not easily noticeable at first glance or may be concealed by fresh paint or cosmetic improvements by the seller. This guide will outline the major red flags to watch for when assessing a potential rental property. Being aware of these warning signs can help you avoid buying a problematic property that will drain your wallet for years to come.

Hidden Structural and Foundational Issues

Structural damage can compromise the stability and safety of a building, leading to extremely costly repairs that go beyond the usual wear and tear. As a prospective buyer, carefully inspect both the exterior and interior for any signs of structural defects. These issues can arise in both older properties as well as new constructions, so don’t be duped by a new property.

Externally, look for cracks in the brickwork, which occur when one side of the property begins settling unevenly, applying intense pressure on the structure. Cracks may appear in stair-step, horizontal or vertical patterns. Also be on the lookout for crumbling concrete, potentially from chemical erosion, and sagging rooflines that dip severely in the middle. A sagging roof is a major red flag that the property is unsafe to occupy without urgent repairs.

Check the foundation for dry mud tubes, which may indicate termites tunnelling in and chewing away at structural walls – their damage further compromises the building’s integrity. You also need to be on the lookout for rising damp which can cause timber decay and mould growth. Inside, uneven floors that slope downward could mean foundation sinking or settling issues. Large diagonal cracks in walls and ceilings, doors and windows that stick, and interior water damage also signal structural problems.

Catching structural issues early is key to minimising repair costs and ensuring tenant safety. Don’t ignore even minor cracking or alignment issues on the outside, as small problems can quickly escalate into major foundation failures. Address all structural damage concerns urgently before finalising any purchase.

Plumbing Issues

Faulty plumbing systems can become a nightmare for rental property owners. Make sure to thoroughly check over all plumbing before finalising a purchase and be prepared to walk away if you spot any major problems. A good way to check is to turn on all faucets and inspect the water pressure, looking for signs of insufficient supply lines or corrosion inside pipes that reduces flow. Don’t forget showers and bathtub taps, checking for slow drainage that could indicate clogs in the drain lines. Likewise, take the time to flush every toilet in the property and make sure each one fills back up appropriately after flushing, listening for any running water that fails to shut off.

Examine under all bathroom and kitchen sinks for leakage stains or mildew, which often occur at pipe joints. If you’re deciding between several properties, it can be helpful to have a video drainage survey carried on the property as well to check for intruding roots, cracks or other blockages that can lead to major backups. Don’t cut corners on plumbing inspections for any new rental property purchase. It’s a major part of a property’s internal system and needs to be functioning properly for tenants, as well as be free from costly issues for you as an investor.

Pest Infestations

Pest infestations can be both a nuisance and a major expense for rental owners. Carefully checking for signs of bugs or rodents during your property walkthrough is crucial. Look along baseboards and in cabinets for any sightings or droppings from cockroaches, ants, silverfish and other common pests. It’s also important to check walls and ceilings for small holes that could allow entry for mice or rats. Be on particular lookout for chew marks and droppings around electrical wires, which rodents are drawn to.

If there are any loft spaces or basements on the property, thoroughly examine for signs of nests or entry points for wildlife. Pay special attention to areas around cookers, dishwashers, sinks and pipes where cockroaches and bugs often gather. Dealing with pest removal and ongoing management can become very costly and frustrating for rental owners. So, it’s critical to assess the scope of any pest issues before finalising the purchase. Doing so now can save thousands down the road.

Electrical Complications

Problems with a rental property’s electrical system can lead to unsafe conditions and expensive repairs down the line. During your walkthrough, carefully inspect all visible wiring, electrical outlets, light fixtures and the main electrical panel, looking for any exposed, damaged or outdated wiring, which poses serious fire and electrocution risks to your future tenants. It’s a good idea to have the property checked by a qualified electrician to ensure you’re not missing any problems.

A professional will also be able to examine the electrical panel to ensure there is sufficient amperage for the unit size and projected tenant needs. Outdated 100-amp panels in larger units will likely require upgrading to a modern system. Being proactive about identifying any electrical system deficiencies now rather than after purchasing will save huge costs and, most importantly, safety risks down the road.

When evaluating a prospective rental property, it’s crucial to be on high alert for any issues that could turn into major headaches and expenses later on. Don’t let shiny surfaces or cosmetic improvements distract you from underlying problems. Take time to thoroughly inspect for the complications and red flags outlined here. Repair costs only become exponentially higher if issues escalate after acquiring the property, so while no property is perfect, being vigilant about identifying these red flags, among others, will help minimise the risks of buying a true “money pit” rental.

Was this post useful?
Thanks so much for your feedback!
Got it!
Thanks for your feedback.
Share with friends:
Popular articles

Get the best of Landlord Insider
delivered to your inbox fortnightly

Sign up and we’ll send you our latest posts, tax tips, legal tips, software tips and compliance deadlines, everything you need to know every two weeks. Unsubscribe any time.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.