- Hey, how's it going? This is Seth from REtipster.com, and in this video, we're
going to talk about an issue that has the potential to
make or break a land deal, and that is the perc test. (upbeat instrumental music) So what exactly is a perc test? Well, the word perc is actually short for the word percolation, and
percolation is what happens when water hits the soil and
then drains through the soil, and the reason this is important is because a lot of properties out there do not have access to
a nearby sewer system. If you ever want to build
a house, or a building, or a dwelling of any kind on one of these types of properties, if you want to be able to flush the toilet and have the wastewater go
to an appropriate place, you need to have a septic system in place, and a septic system is essentially just this giant underground tank where all this wastewater
goes, and in time, a lot of the wastewater will overflow out of the septic system into the soil, and then the soil will clean the water before it gets back into the
natural system underground. Septic tanks are actually
a brilliant invention, and as important and as
gross as septic tanks are, in order for them to work
properly, the soil that it's in, it needs to be able to pass a perc test, which means that when this
waste water goes into the soil, it needs to be able to drain
properly through that soil, and there's a lot of
places around the country where the water simply
doesn't drain fast enough, or it doesn't drain at all. This can happen whenever
the soil has a lot of clay or silt in it because that
soil is very very dense, and it takes a long time for
water to drain through it. Then when you've got
a septic tank in place and that wastewater
isn't draining properly, that's a massive problem. That means the septic tank
basically doesn't work and you can't flush the toilets, which means you can't have a house there, so that's why it's very
very important to understand if you are going to build something there, and if yuu're not going
to use a sewer system, can that soil pass the perc test? Now in most jurisdictions
around the country, the way a perc test works is you'll have to call the
county health department or somebody at the county level, and they will come out on the property and perform this perc test for you, usually at the cost that's
anywhere from $150 to $1,500, somewhere in that range, and the cost usually depends on what the county feels like charging and also how many people
are involved in this test. Sometimes the person from the county will simply go out to the
property and just dig a hole, and pour water into it, and
time how fast it drains. Other times, you'll have to
get contractors out there with there heavy equipment to
dig a much much larger hole and do it that way, so it kind of depends on
what's involved in the process, but essentially all that's happening here is they're digging a hole in the ground, they're pouring the water in it, and then timing how long it takes for that water to drain through the soil, and if it doesn't drain fast enough, or if it doesn't drain at all, then it's going to fail its perc test, which can be a huge problem
and have a major major impact on the value of the property. As you can imagine, if
the highest and best use of a property is to simply build a house, and all of a sudden you
can't build a house anymore, then that kind of does a bad thing to the value of that land, so how important is a perc test
to your specific situation? Well, I think you gotta ask
yourself a few questions. First of all, how much are
you paying for the property? I know a lot of the vacant
lots that I have bought, I've been paying well under
$1,000 to buy the property free and clear, which is very very cheap, and in cases like that,
you kind of have to weigh the benefit of paying more for a perc test than for the price of
the property outright, and especially if speed is an issue, if you have to get that
deal closed this week, then honestly, it may be
worth rolling the dice and taking a risk, not necessarily knowing if the property is going
to pass that perc test. I'm not necessarily telling
you that you need to do that, but I'm telling you my experience when I have come up
against this situation, that's how I've handled it, and to date, I've never
gotten burnt by it. I can't tell you that's
never going to happen because it could, but I've never had this come back to bite me, so just take that for what it's worth. I think you also have to ask yourself, are there any alternative
uses for this property if I can't build a dwelling on this land? For example, there's a lot of properties that may fail a perc test, but that's not necessarily
the end of the world. You could also use this
property for farming, or simply using it for outdoor storage, using it for camping, or
hunting, or any number of things that does not require
having a house or a building on the property, so it still has value. It may be much less value, but
it doesn't necessarily mean the property is worthless just because it happened
to fail its perc test, so that's another thing to keep in mind. If you're working on a
deal, and you're in a hurry, and you're not paying
a lot of money for it, and you're willing to take some risk with this perc test situation, one thing you can look
at just to give yourself some vague idea of what's going on is to look at the adjoining
parcels of the property and see are there any
other houses or buildings built on those parcels? Because if there are, and if they've clearly resolved that issue to the point where they
could build something, then there's at least a chance that you'll be able to do that too, just based on the fact
that others in the area have been able to do that. And keep in mind, this is very important, just because neighbors were
able to do it does not mean that you will be able to do it, but in the absence of
any other information, it is definitely an
important thing to consider. Another thing you'll want to keep in mind is that if you've got a
property that's large in size, it's entirely possible that the property could fail the perc test in one area but pass the perc test in another area. I once had a 12 acre parcel
of land that actually failed the perc test in several
spots around the property, but they were able to find one
section of it in the corner that did pass the perc test, so if you happen to test one spot and find that it does not perc, it's not necessarily the end of the world. You'll want to make sure
you're testing other areas just to make sure you exhausted
all your other options and that you truly are sure that the property really
does fail that test because in a lot of
cases, the soil can differ based on where you're at on the property, so be sure to check that
out if you're doing this. Another thing to keep in
mind is that it is possible in some areas to build what's called a modified septic system. This kind of thing is not always feasible, and it can get very expensive very fast, so in a lot of cases, it's
like really not worth it, but if you've got a property
where the feasibility of a septic system has all
the impact in the world on the value of that property, then it could be an
avenue worth considering. It's also worth noting that in some cases, if you have time, and you're
willing to wait long enough, just because there's not a sewer system available to your property today doesn't mean there
won't be one in 10 years or 20 or 30 years. As the population continues
to grow in a lot of areas, it's entirely possible that developments could extend out from the city, and at some point in the future, there will be a sewer system
available, and at that point, then you can build a
house on the property, but you simply can't do it if you're going to rely
on the septic system. This one is definitely a long shot. I would never purchase a
property with the assumption that someday there will
be a sewer system there. However, if you find yourself with a property that you already own, and you're in this
situation, you never know. At some point, there could
be a sewer system available, and you can pursue it at that point, so it's just a little glimmer
of hope to keep in mind if you're in that situation. If you want to learn
more about all of this and see a lot more detailed information, definitely go check out the blog post where I cover all these
details and a lot more over at REtispter.com. I'll be sure to link to
it beneath this video if you want to check it out. Whatever your situation is,
I hope this was helpful. I hope it gives you more
confidence and information as you're pursuing the
due diligence process on the properties you're looking at, and I wish you all the best
in your next land deal. Talk to you later.
