SS267: Deferred Maintenance: How to Spot and Budget for Hidden Property Issues

  • January 31, 2026
  • Rokon Ahmed
  • Strategy Saturday
  • Comments Off on SS267: Deferred Maintenance: How to Spot and Budget for Hidden Property Issues
SS267: Deferred Maintenance: How to Spot and Budget for Hidden Property Issues

When purchasing multifamily properties, identifying deferred maintenance issues is crucial to determining the investor’s renovation budget. In this episode, Charles discusses the process for identifying deferred maintenance issues during due diligence.

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Talking Points:

  • Deferred maintenance can represent a great opportunity for a new investor if they are aware of the issues and have budgeted for them correctly, or it can be a nightmare. The goal of this episode is not for us to become property inspectors, but to know what to look out for and, most importantly, to hire several inspectors and contractors when performing due diligence on a property. How do I spot deferred maintenance when I walk through a property?
    • 1. Inspect Major Systems. These are going to be your most expensive repairs. I would hire a separate contractor to review each system separately. 
      • Roofs – looking for old roofs, active leaks, and patchwork, which is very common. 
      • Plumbing – looking for galvanized pipes and cast-iron pipes. I would also have my plumber video scope the pipes, which would reveal tree roots, cracks, or clogs that could lead to expensive repairs. Also, check the age and condition of hot water heaters, which can be done pretty easily.
      • Electrical – looking for aluminum wiring or Federal Pacific or Zinsco electrical panels. Having any of these will dramatically increase your insurance costs since they have been shown to be more fire-prone.
      • HVAC – looking for old, mismatched units, signs of deferred maintenance, like dirty or nonexistent filters.
    • 2. Inspect Unit Interiors. Unit walk-throughs provide a glimpse of any potential deferred maintenance.
      • Water stains – looking for water stains on ceilings and walls. Make sure to check all ceilings and closets.
      • Mold or musty odors – could signal a mold problem.
      • Kitchens and Bathrooms – checking under sinks, behind toilets, and around tubs and showers. Looking for the water stains or soft spots in the flooring.
    • 3. Inspect Exterior Site Conditions. Walking the site will give you a different perspective on what might need correction.
      • Stairs, walkways, and parking lots – looking for trip hazards.
      • Poor drainage – looking for potential exterior water issues.
      • Rotted wood – looking for rotted wood, trim, and balcony issues.
      • Safety issues – looking for a lack of lightning, exterior doors that are not secured, or fencing issues.
  • The goal of walking the property and picking out potential issues sets the stage for your offer and for a formal inspection with licensed contractors. It also helps you formulate your underwriting. Deferred maintenance or possible future problems can also be spotted in the seller’s documentation. Maybe you see the seller spending a lot on HVAC repairs and maintenance, but not much, if any, on capital expenditures around HVAC units. It might mean they are just applying patchwork, and those systems might need to be replaced in the near future.
  • Before we conduct a formal inspection, you will have a purchase and sale agreement signed, so understanding what deferred maintenance is present is critical to your underwriting, budgeting, and going under contract. Of course, if your contractors uncover unforeseen issues during due diligence, we can go back to the seller and possibly renegotiate, but identifying deferred maintenance during a preliminary walk-through will make you more confident when submitting your initial offer. To learn more about due diligence, please check out episode SS161.

Transcript:

Charles:
Deferred maintenance can either be a huge opportunity or a total nightmare if you miss it. Most investors don’t get burned on what they see. They get burned on what they assumed was fine. Welcome to Strategy Saturday. I’m Charles Carillo, and today we’re discussing deferred maintenance, how to spot and budget for hidden property issues. So let’s get started. Deferred maintenance can represent a great opportunity for a new investor if they are aware of the issues and have budgeted for them correctly, or it can be a total nightmare. Now, the goal of this episode is not for us to become property inspectors, but to know what to look out for, and most importantly, to hire several inspectors and contractors when performing due diligence on a property. So how do I spot for maintenance when I walk through a property? Number one is inspect major systems. Now these are going to be your most expensive repairs, and I would hire a separate contractor to review each system separately.

Charles:
The first part would be roofs, looking for old roofs, active leaks, patchwork, which is very common. The second part is plumbing. So looking for galvanized pipes and cast iron pipes. I would also have my plumber video scope, the pipes, which would reveal like tree rocks, cracks, or clogs that could lead to expensive repairs. Also, check the age and condition of hot water heaters, which can be done pretty easily by you or your property Inspector. Electrical is another system looking for aluminum wiring or Federal Pacific or Zco electrical panels that have been known to have issues and be fire issues, have issues with insurance, and having any of these will dramatically increase your insurance costs since they have shown to be more fire prone. The last system is looking for HVAC issues, so mismatch units, signs of deferred maintenance like dirty or non-existent filters, which I’ve seen all that before when walking units.

Charles:
And you can pretty much pick up a lot of this stuff just from being a little bit knowledgeable when you’re walking them, but for certain things you won’t know. That’s why you wanna bring in electricians. That’s why you wanna bring in your HVAC techs. That’s why you wanna bring in plumbers and that’s why you wanna bring in roofers and it’s all gonna be well worth it at the end of the day. The second part is you want to inspect the unit interior. So unit walkthroughs, they provide a glimpse of any potential deferred maintenance water stains, looking for water stains on ceilings and walls, and make sure to check all ceilings and closets, mold or musty odors so it could signal a mold problem. Kitchens and bathrooms are big ones. This is where you’re really getting your top rents, but where there’s also when they look nice, but this is also where there could be a lot of issues.

Charles:
So you want check under sinks, behind toilets, around tubs, showers, looking for water stains or soft spots in the flooring, which usually is they try to really patch up. So you have to be a little bit knowledgeable about going around like the toilet, being underneath the sink and seeing exactly where, hey, they just put in some new, a new piece of wood and painted it white like it was the bottom of the cabinet. But when you look underneath it, you can see that is because there was a leak before, that might have gone down to the flooring. So these are things that you have to be knowledgeable when you’re taking a look in walking properties. Number three is inspecting the exterior site conditions. So walking the site will give you a different perspective on what need correction. So this is also stuff that your insurance company is going to look at as well when they’re walking the property.

Charles:
Now you don’t have to get inside to see this. They can see and they can know what are gonna be insurance claim nightmares. So stairs, walkways, parking lots, look for trip hazards, poor drainage. So looking for potential exterior water issues. Now a lot of this, as you’ve noticed, is around water. Now, water like makes and breaks properties and in the sense that if the roof is leaking, you can have appliances that are leaking. You can have plumbing that’s leaking, you can have exterior water that’s coming back to the property because it’s not, the drain isn’t done correctly. So these are very important things to always look out for any type of water damage. But continuing on rotted wood, so looking for any type of rotted, wood trim and balcony issues, big thing, it’s a big red flag for any type of insurers. Safety issues, looking for a lack of lighting, exterior doors that are not secured or fencing issues.

Charles:
I see these are gonna be a lot of things where it is going to hurt your insurance costs. It’s gonna be more dangerous for your tenants. You’re gonna have a lot more problems with these issues. And other thing too is that they’re not gonna increase your rent that much once they’re fixed or if they’re correctly, no one’s gonna pay you more because they don’t trip walking on the sidewalk. Now the goal of walking the property and picking out potential issues sets the stage for your offer and for a formal inspection with licensed contractors. It also helps you formulate your underwriting. Deferred maintenance or possible future problems can also be spotted in the seller’s documentation. Maybe you see the seller spending a lot on HVAC repairs and maintenance, but not so much if any on capital expenditures around HVAC units. It might mean they’re just applying patchwork, and those systems might need to be replaced in the near future.

Charles:
So before we conduct a formal inspection, you will have a purchase and sale agreement signed. So understanding what deferred maintenance is present is critical to your underwriting, your budgeting, and going under contract. Of course, if your contractors uncover unforeseen issues during due diligence, we can go back to the seller and possibly renegotiate. But identifying deferred maintenance during a preliminary walkthrough will make you more confident when submitting your initial offer. Also allow you to have some of those tough conversations with the seller upfront before you start paying an attorney to put together PSAA purchase and sale agreement. So learn more about due diligence. Please check out episodes SS 1 61 I hope you enjoyed. Please remember to rate, review, subscribe. So make comments and potential show topics@globalinvestorspodcast.com. If you’re interested in actively investing in real estate, please check out our courses and mentoring programs@syndicationsuperstars.com. That is syndication superstars.com.

Charles:
And then look forward to two more episodes next week. See you then. Have you always wanted to invest in real estate but didn’t have the time, didn’t know where to find the deals, couldn’t get the funding, and didn’t want tenants calling you? Since 2006, I’ve been buying income producing properties in great locations that provide us with consistent passive income while we wait for appreciation in the future and take advantage of tax laws while we’re waiting. And unlike your financial advisor, we invest alongside our investors in every property we purchase. Check out invest with harborside.com. If you like the idea of investing real estate, if you like the idea of passive income, partner with us@investwithharborside.com. That’s invest with harborside.com.

Speaker 2:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax, legal, real estate, financial, or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of syndication Superstars, LLC exclusively.

Links Mentioned In The Episode:

  • SS161: What is Due Diligence in Real Estate

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