One of my Property Management Clients asked me for clarification on the specifics on the home Inspection process and the Appraisal process. He wanted to know if these overlap in any way in regard to his Philadelphia Rental Property.
Most rental property owners have had both a home inspection and an appraisal on each one of their properties. But they are certainly different operations and each one services a different function for the property.
First, An Appraisal. A rental property is likely going to need a professional, licensed valuation of the property at some point. This valuation would be based on the property’s worth if it was sold. This would be the case even if the landlord intends to hold the property as a rental.
An appraisal is based upon several valuations, but an important one is how much comparable properties in the area have sold for recently.
Second, A Home Inspection. The purpose of a home inspection is to identify any issues, concerns and future expenses a property might face. This information is extremely important to know before purchasing a rental property. But it can also be helpful from an investment perspective for any homeowner.
While these are two separate things, these can intersect and often do.
This often happens with certain types of loans. Low-interest FHA loans for instance are very concerned about a property’s safety and not just its value.
From a property management perspective, both of these items can be great investment tools for a landlord.
Its a property manager’s job to manage these things for you; but if you are opting to go it alone, these can be used to better understand your rental property’s position in the marketplace and also to know its physical health and any impending repairs. A property manager knows when your hot water heater or HVAC system will die and when you will need a new roof.
If you don’t maximize with a property manager, you should at least utilize these tools.