How Property Inspections Save Investors From Costly Mistakes

Erika (01:31)
everyone, welcome to the Real Estate Pro Show. I’m your host, Erika, and today I’m thrilled to be joined by Jay McCabe, executive and partner at Focus Property Inc. It’s so great to have you.

Jay McCabe (01:43)
Hi, thanks Erika, thanks for having me. I’m excited to be here.

Erika (01:46)
Can you share what inspired you to work on this section of the real estate industry?

Jay McCabe (01:52)
Absolutely, so I’ve always had a heart for the real estate industry. I was in the Army for 22 years and so there’s a lot of moving and buying and selling of houses during that period of time. And before I joined the Army, my dad was very involved in…

buying houses and kind of fixing them up and improving them. So I’ve always had an appreciation for real estate, but I didn’t necessarily want to go into a direct kind of sales type role. And so I thought that the real estate home inspection, property inspection industry was a way that I could say adjacent to real estate, get experience with folks moving into and out of their dream houses and have a flavor of all of the different varieties of architecture and things that we see across our great states.

So I thought that that was a natural fit from my experience to grow into something that I was somewhat familiar with and then wanting to grow.

Erika (02:42)
That’s really exciting. Do you have any stories that you can share? Maybe there was a property that was a little bit challenging. How did you deal with that?

Jay McCabe (02:53)
Sure, ⁓ well we’re in Eastern North Carolina in Jacksonville, Wilmington and

Fayetteville and on the coastal area there’s a lot of super tall very luxurious vacation homes and we were we were asked to inspect what turned out to be a 4,000 square foot main structure with a 2,500 square foot garage structure involved in that so quite a heavy load and we try to get all of our inspections done in about three hours and so we the beauty of being a full company is that we were able to surge multiple inspections

to that large site and take care of all of those systems and still get that done very quickly. And so that was an exciting thing to see on like this is a really cool neat house lots of I mean it had an elevator on the inside all of these wonderful things that you think about in a high-end luxury home. And then on the other end

We went to an average home that was built about 15 years ago and we discovered that the trusses in the attic had all been cut away to make room for the HVAC air handler. And so there was no real support upon the roof itself just to make room for the air conditioning. So we were able to point that out to the potential buyer and they were able to have a more informed decision of the house that they were considering purchase.

at everything we like to think of ourselves as the advocates that speak for the home when nobody can speak for it.

Erika (04:17)
Yeah, yeah, that’s that’s really cool. Wow, that is that is a crazy discovery. How if your company works at all with like investors, how do you help investors avoid, you know, those kind, you know, walking into a property that they really shouldn’t?

Jay McCabe (05:21)
Sure, well it’s really important during the home inspection and property inspection piece, both commercial and residential, to understand exactly what it is that you’re buying. And as I just said, we speak for the house itself. The house can’t open up and say, hey, all of my attic trusses have been cut, but we can see that and document it. And all of our reports are…

certified through North Carolina State Home Inspection Board. everything that we have carries the weight of…

legality I guess, officiality. you can, we deliver to potential investors or buyers a comprehensive report that says these are all of the ins and outs of everything about this house so that you can say eyes wide open what exactly it is that you’re purchasing. Beyond that we can say hey we’ve identified these faults or these questionable aspects of the home and then make recommendations say hey you really need to get a plumber to look at this, you really need to get a structural engineer to look at that, you really need to get

and electrician to look at this. One of the things that we see a lot is do-it-yourself repairs and improvements that aren’t necessarily done poorly, but they might be done in a way that wouldn’t be a standard way of going about it. And so we like to highlight things like that and then recommend that they be checked out by… ⁓

a professional in that industry. And so we would tell an investor, hey, you’re going to buy this home. I’m not going to tell you if it’s a good or a bad investment. That’s your job. But I will tell you that, hey, this house has got the potential for these challenges, or this house has all of these things going for it that are looking good. So it’s really just to help to be a fair arbiter of truth.

Erika (06:59)
Got it. And Jay, with you being an executive at Focus Property, you probably wear a lot of hats. How do you balance the day to day with different projects that you have going on?

Jay McCabe (07:13)
Sure, so it’s really, it’s a lot of fun. No two days are the same. Either I’m doing outreach to agencies that have used us in the past and doing our relationship cultivation. I’m reaching out to new agencies to do introductions. We also provide continuing education courses for our real estate agent friends. In fact, in October we’re doing an event in Jacksonville that we’re gonna open up to everybody on that line. But so I’m…

building relationships, maintaining relationships, scheduling, continuing education, doing site visits, and doing all of our social media marketing and all of our email outreach. I have a partner as well that works with us in the growth department. She does a lot of the phone calling and emailing and follow up. And so we try to do a full wrap around care of all of the agents that would work for us or any other potential clients that we might have.

So that’s kind of the nuts and bolts, but also kind of in a leadership position. I do what I can to provide some guidance and direction to our inspectors, as well as advise the ownership team and the office staff of changes that are coming down the line, both in the industry and things that I’m hearing from agents about concerns that they have. So it’s always refining our own processes through that communication and relationship building. So it’s a lot of hats to just

I try to keep my glass balls in the air and if a rubber ball drops every now and then that’s alright.

Erika (08:34)
Love it. You said something earlier that caught my attention and it was that you offer continued education for agents and that you’re opening it up to other people. Now, so I’m sure you’d be able to give some excellent advice to our people who are new to the real estate industry with everything that you see with inspections. What would be your top piece of advice or tips?

Jay McCabe (09:37)
Absolutely, yes.

It’s one thing to make sure that all of your blocks are checked, that you have all of your state requirements done, that you have all of your licensures done, and that you’re doing all of the things the right way. That’s part of it. But then you have to figure out, you doing the right things? And so what I would tell new real estate agents or anybody that wants to be an investor or get involved in property, and that is communicate, communicate, communicate.

It’s been my experience ⁓ that the most successful home inspectors are the ones that answer their phone. Likewise, most effective and successful real estate agents are the ones that answer their phone. The more proactive one can be, not making assumptions that other folks know exactly what it is that they’re talking about and being able to provide a little bit of humility and grace in that education goes a very long way.

making sure that you are willing to say, I don’t know the answer to that question, but I’ll find out and then find out and then follow up. Communicate, communicate, communicate. It’s absolutely critical.

Erika (10:43)
That’s very solid advice. And speaking of being with all of those agents, how has being a part of that community helped your business grow and what specifically from those connections helps your business?

Jay McCabe (10:58)
So certainly that’s a great question. So when we go, we will go into a brokerage and deliver a four hour ⁓ structured continuing education elective. Right now, just as it just for the sake of conversation, the most popular one is called from soil to sale.

septic tanks in North Carolina. 50 % of all the houses in North Carolina are on a septic system. Now, not a lot of people wake up in the morning and say, I want to go talk about wastewater and septic for four hours. But it’s part of that requirement for the agents to keep their continuing education going. So we use that as an opportunity not only to deliver that and to demonstrate that we do know what we’re talking

to introduce our inspection team, but we also use that as the opportunity to network and to shake some hands and to build on relationships that exist and to grow new ones. those networking opportunities are absolutely critical and without fail, those interactions lead to an increase in referrals back to us from agents within that brokerage, which we, that’s kind of our methodology and everybody knows that coming into it. We also are involved

involved in the various boards of realtors and chambers of commerce throughout the four major metropolitan areas in the state where we like to consider our four home bases. Again, Raleigh, Fayetteville, Jacksonville, and Wilmington. And so as we’re involved in those events at those boards of realtors and at the chambers of commerce, we’re able again to network, network, network. We position ourselves with uniformity. We all wear the same shirt. We all talk the same language. And so that itself presents a significant

air of professionalism and the more our agents see us, the more we remain at the top of mind, the more we can continue to develop those relationships and so it’s absolutely critical you cannot be successful in a people industry from behind your desk. You have to go out and be where the people are and so that’s what we think is very important.

Erika (12:57)
What would be next? What qualities do you look for in someone that you know, like this can be in my trusted circle. This is where I can get referrals. This is who I want to refer people to.

Jay McCabe (13:09)
Sure, so we look at things like that agents or agencies past history. So if they’re an agent that is putting together 10 or 15 deals in a quarter or they’re pretty, they’re pretty, pretty moving in a pretty good clip. If it’s 10 or 15 deals in the last 18 months, okay, maybe they are either struggling and they need some additional partnership or guidance or they are not.

as fully committed to a full-time real estate career as some others. So we look for volume, but we also look for repeat volume and customer service.

⁓ high ratings. We don’t want to be known as the home inspection company that partners with folks that are just trying to put deals through. We want to be a home inspection company that partners not only with the agents but also with the buyers and sellers to make sure that everybody comprehensively understands what is going on throughout all aspects of that transaction. So we look for honesty, integrity, communication. We look for ⁓

folks that have established a network, maybe they have agents that are working on their team. And so we are trying to accommodate and meet the needs of agents that want to take their own business to the next level so that as we continue to bolt on with them, we’re all elevated together.

Erika (15:12)
That’s exciting. Jay, you also mentioned to me earlier when we were talking that you do little bit of investing of your own. Do you have any advice for people who are just getting started in the investor space?

Jay McCabe (15:24)
Sure, so first, it’s kind of the paramount rule, don’t invest more than you’re willing to lose, and ⁓ maintaining a good cushion of emergency money that’s kind of attached to those investments. So the smart move is considering the location, and then you make the most money on a real estate deal at the…

point of purchase, not necessarily at the point of sale. So finding a smart location and finding an opportunity to purchase a home that is undervalued, that is probably the best thing to do. And then maintaining that, and the more involvement you can have directly, kind of the less money you have to spend, but you’re costing a lot of time. So if you can find a trusted…

a trusted property manager, maybe if you’re geographically away from the home itself, having a trusted property manager and understanding those terms and being involved with all of the details of the house so that you are the one that is actually making the decisions, I think that’s been fruitful to me and that’s been successful. Also, being as detached emotionally as you can from these things is very important. Falling in love with your investments is a very quick way to double down on a sinking ship.

You have to be emotionally distant and financially involved in any kind of investment that you’re willing to take part of. have had, as I mentioned before, having been in the Army, I’ve been in the position where I’ve had to move and leave a house, turn it into a rental property, and that has usually led itself to three to five years of additional …

equity bill and revenue coming in and then I’ll look at the numbers and if I need to sell the house then I will or I’ll keep it as an income stream. And so that’s something that’s been very opportunistic for me and I’ve taken advantage of things like the ⁓ VA loans and things like that where we have minimal down payments and stuff just to keep the cash flow going. So I feel like that’s been very, very helpful for me. And then I’ve also just got some ⁓ investments into some group real estate funds

that are tied to the real estate market and those tend to do pretty well over time.

Erika (17:25)
Jay, have you ever had a deal that didn’t quite go how you expected? You mentioned a sinking ship. Was there ever a time that you ⁓ quickly had the pivot come up with a totally new plan? Tell us about it.

Jay McCabe (17:39)
Yeah, so this is a little bit of a third party. This is actually a story from my dad, but it is one that I feel is relevant. my father down in the San Antonio, Texas area was getting into real estate investment, property management, and he had purchased a handful of duplexes with his brother and they were working those out. there was one that just had problem after problem after problem, poor renters, and then they were not maintaining the property very

well. My dad said he that the the renter ended up leaving the electricity off for a long period of time and things just kept getting bad to worse. Spoiled food in the refrigerator all these kinds of things and so it was he was looking at he it was going to cost him twenty to thirty thousand dollars to bring the house back up to being livable.

or just cut it off and hand it off to his brother, which is what he ended up doing. And he sold it and made, know, broke even. But that, again, he wasn’t willing to continue to pour money into a problem that was just gonna compound itself. And so that’s why I said you can’t be emotionally involved in these things either. You have to be able to walk away when the deal is going south. that’s a little bit of an example. Another example is in my own home when I…

had it rented out and I felt like it was a challenge for me because the renters or the occupants were not treating the house as well as say I would have, but they weren’t doing anything destructive and so they were still just living life and that was just none of my business and I had to stay away from it. So anyway that’s kind of just a couple of points on that.

Erika (19:15)
Yeah, yeah, that was very, very insightful. So let’s talk more again about focused property inspections. Can you share what’s on the horizon? Are you guys maybe looking at larger projects, expanding your service offerings, maybe entering a new market?

Jay McCabe (19:33)
Yeah, so Folks Property Inspections started in Maine and they over the course of the last 28 years that they’ve been in business there, they are the number, or we I guess are the number one home inspection company in the state of Maine. We moved, or we started the branch here in North Carolina about three and a half years ago and we’ve seen pretty significant growth year over year over the last three, three and a half years.

What we intend to do is to ultimately become the number one home inspection company in the state of North Carolina. And then we’ll expand into the South Carolina region and then Georgia and then eventually the entire East Coast. But that’s the 10 year plan. In the short term, we are expanding to do more formalized continuing education events. As I mentioned, we’re doing one in October in Jacksonville, North Carolina. We’re inviting everybody to come.

there’s opportunity to do two electives or the required BICUP and GENUP courses. So that’s something that we’re trying to formalize as we establish more of an education wing of the organization. We’re also expanding into commercial property inspections as well. We’ve got teammates that are going through the education process to make sure that they can do comprehensive and authorized commercial inspections. Beyond that, we’re looking at standing up a formal headquarters

building, office building in North Carolina. Right now we work remote tethered to our team in Maine. And so there’s a lot of growth on the horizon for focus property inspections. We are

So speaking of Raleigh, North Carolina, we have jumped in and are founding partners of the Best of Riley initiative that’s spearheaded by Gretchen Cole at the Cole group there here in more on the coast. We’re involved again with the Jacksonville Board of Real Tour of the Carter County Board, all of the coastal folks as well. So in the horizon starts, you’re going to start seeing a lot more of this logo and a lot more of these polos walking around in real estate transactions. We’ve got some more inspectors that we’re

bringing on through our hiring pipeline. So the growth is looking pretty healthy right now.

Erika (21:38)
That’s awesome. And for our listeners who want to connect with you or learn more about focused property inspections, what’s the best way for them to reach you?

Jay McCabe (21:46)
Sure. So ⁓ our website is fpi-web.com slash NC for North Carolina. You can email me directly, growth at fpi-web.com. And then of course, focus property inspections is on Instagram, Facebook, LinkedIn, X, threads.

and YouTube. I should know that more quickly since I write it all. yeah, so we’re all over social media. You can learn about us. You can see pictures of houses that we’ve inspected. You can see videos from our inspectors. You can get to know the team a little bit, and you can get an idea of the quality that we provide.

So that probably would be the best way to learn about us. We also have a phone number. If it’s OK to share that, I can give my phone number. It’s 984-444-2099. And that will contact you directly to our scheduler. And then we also, again, on our website and on our social media, you can find how to quickly book. So we’re just about three clicks away from booking an inspection for anybody.

Erika (22:49)
That’s great. Jay, it was so great having you on. I appreciate all your advice, your stories, your insight, and thank you for your service.

Jay McCabe (22:57)
Thank you, Erika. I appreciate the time and I appreciate the opportunity to be here.

Erika (23:01)
And for our listeners, stay tuned for more inspiring stories from people who are building businesses the right way in the real estate industry. We’ll see you on the next episode.