When we think of flipping houses, we think of those guys on TV that make it look so simple. You know the ones: they do some work on the home then sell it for a zillion dollars. Looks simple enough, right? The problem there is that you’re looking at TV. In the real world of buying and selling real property, there are actual pitfalls that can hit both the seller and the buyer, says real estate investment specialist Sky Mikesell.
So what could possibly go wrong if you’re looking to buy a flipped house? It can be a great way to get a freshly remodeled and renovated home at a good price. But there are a few things you need to be aware of before signing on the dotted line. While most investors and realtors who deal with flipping houses are reputable, it pays to adopt the old Cold War attitude when you’re talking potentially spending hundreds of thousands of dollars: Trust, but verify.
Here’s a few highlights that you need to watch for when looking at those homes being flipped:
Is it a good flip?
Not all flippers are created equal, unfortunately. Some have better contractors that others. Some are themselves better at doing the work of renovation than others. So take your time when you’re viewing the home. Pay attention to the small details:
If the home is vacant but professionally staged, do a bit of snooping. Make sure that the area rug isn’t hiding an uneven stain on the wood floor. Be sure the shower curtain isn’t hiding bathroom tiles that don’t quite match up. Open the kitchen cabinets to be certain they shut tightly. Open and close the doors throughout to make sure they’re hung straight.
Stop to smell the roses, or whatever plants and saplings are in the freshly landscaped yard. Make sure they aren’t just shoved into the mulch to look good for the showing. They should be properly planted into the soil if they are going to flourish. If they’re only dotting the mulch, you’ll be looking for a landscaper within a week of moving in.
Check property records to find out how many times the property has changed hands, who owned it in the past, and if it has maintained its value.
Go for the guts
Those who are serious about the quality of the houses they flip, and their reputations as property investors, won’t simply slap a little paint on the wall, shove in a new refrigerator and call it a complete renovation. As you tour the home, do a little closer inspection:
Look at the plumbing under the sinks in the kitchen and bathrooms. If the pipes look wet, corroded or mineral buildup is visible, the pipes have probably not had any upgrades done.
Ask to see the ductwork. If it is simple sheet metal shaped into tubes or rectangles, you’re looking at old ducting. If the ductwork was renovated, it will most likely be modern fiberglass or double-backed flexible aluminum.
Have an inspection of the foundation done. There is always a possibility of a structural defect that was overlooked or simply not addressed. That’s not a problem you want to inherit.