A pig in a poke is a British phrase to refer to something that is sold or bought without the buyer knowing its true value.
How do you underwrite a house with no interior inspection? I’ve said it before, and I’ll say it again. I can fix a bad house, but I can’t fix a bad block.
The first step to rebuilding a neighborhood, a street, a city, is to make sure the block is a place we want to own a home. A place people want to live. A place up and coming, not dying.
We drive down the street of a property we have interest in, see who’s there, who hangs out, spend a good half hour watching and studying.
Who lives there? What are the neighbors like? Do they take care of their properties? Would people feel comfortable renting there? How much vacancy is there on the block? And if there is vacancy, is it blighted, or properly boarded-up and maintained?
(Remember: A boarded-up house suggests someone took the time and effort to buy plywood and install it to secure a property for capital preservation or future renovation.)
Either one of these are not preferable to an occupied house with people living in it, but it’s better than a house that’s abandoned, ignored, or neglected.
If a block is home to a couple of vacant properties, that’s ok. The problem comes when there are many vacant properties – more than the inhabited ones. You don’t want that!
A good investment is one where people want to live, in a neighborhood with neighbors. A good investment shows pride of ownership, pride of residency. Mowed lawns. Garbage picked up. People who care. When people don’t care about their abode, they won’t care about yours.
Things to look for: the condition of the roof, clean and repaired tuckpointing and siding (hopefully it’s not falling off). Fluidity of design – are there multiple kinds of siding, roof shingles missing, gutters falling down or is everything consistent, matching and in good working order?
Are there trees growing out of the gutters? Is mortar missing and bricks shifting because they haven’t been properly maintained? Are trees growing near the foundation that might cause issues? Are windows new, or do they need replacing? Is the foundation vertical or canted in one direction?
All these are functional issues that can be seen just from looking at the property.
Another good sign of an investable neighborhood is when there is an active community or neighborhood association or block club. Again, that promises connection, pride of ownership, a sense of neighborhood harmony.
Finally, you want to see if the house it already occupied. You don’t have to go inside to determine this - if it’s trashed on the outside, with deferred maintenance that’s visible, it’s probably the same on the inside.If the outside is really nice, the inside likely is, too. Yeah, we’re guessing, but these are educated guesses which are true indicators.