A Little Research Upfront Can Help You Avoid a Lot of Heartache Later When Purchasing a Flipped Home
Thanks to the popularity of TV shows like HGTV’s “Flip or Flop”, most people understand the concept of a house flip. An investor buys a home in some state of disrepair—often a foreclosure or distressed property—makes some improvements to the property, then attempts to sell the home for a profit. It’s often a win-win, as the investor makes a little money and the homebuyer gets an updated home with modern fixtures and features, without having to do the work themselves.
If you’re thinking of buying a flip, however, it’s important to do your homework. While there are plenty of ethical and experienced home flippers out there, it’s not unheard of to find some that are just the opposite, as this article points out.
Here are a few ways to help ensure the flip you want to buy isn’t a flop:
- Think Like a Home Inspector
Nearly all potential home buyers are going to have a home inspection done on a home they’re considering purchasing. Smart house flippers know this. And savvy house flippers will be sure to take care of the things they know a home inspector will flag. Typically, these are major systems like the roof, HVAC (especially here in Florida), plumbing & water heater, electrical, and anything related to the pool, if there is one. If any of these items have been missed (e.g., there’s a leak in the roof, the A/C hasn’t been serviced/cleaned or replaced, etc.), you may want to start taking an even closer look at all aspects of the improvements that have been made.
- Check for Permits
Use your county’s website to check for any permits that have been pulled on the property. You’ll quickly be able to confirm whether or not the advertised improvements to the property were actually made, and made properly. And you’ll be able to ensure that all permits on the property have been closed.
- Research the Seller
Who is the person or entity flipping this home? Have they renovated homes in the past, or is this their first flip? Did they use all licensed, experienced contractors, or did they rely on their Uncle Bob, who used to be a plumber? Getting some details about who renovated the home can go a long way toward helping you determine if a home is a solid flip, or possibly a flop.
Buying a flip can be a great way to get into well-established neighborhoods where there’s no more building going on. And you can get modern fixtures and features in an older home, without having to do the work yourself. The key is to do your research and make sure you’ve truly found a diamond in the rough, and not a future money pit.