John Bendall and MortgageNewsDaily.com share advice on buying a “Flip”

The practice of “Flipping” houses for profit has grown in popularity over the last several years.  Especially with the attention brought by television shows on the topic like A& E’s Flip That House.  Investors looking to make a quick buck have pilled on the “Flipping” bandwagon.   Now that the Real Estate Market is shifting; offering a larger selection of homes for buyers to choose from, Flips are starting to crowd the market.  A recent article on MortgageNewsDaily.com suggested that purchasing a flip can be a great deal, if you know what to look for.  Searching public records often provides the necessary clues to identifying a flip, such as who currently owns the property, weather or not there has been any foreclosure activity or bankruptcy, and even the terms of the current mortgage. One of the most crucial factors when buying a flip is to have a good home inspector go through the property with a fine tooth comb.  Often flips have just been repaired superficially hiding potentially large problems.

An excerpt from a recent article on MortgageNewsDaily.com stated:

This is the time for a really thorough home inspection.  Pay extra if necessary to have the inspector crawl through the attic, basement, and crawl spaces. You want to know one important thing.

Did the seller merely put lipstick on a pig?

Have problems been repaired or just covered up? New spray paint made especially for the purpose do a good but temporary job of covering scarred and stained laminate countertops but those stains will be back within months. Wallpaper can camouflage crumbling plaster or water stains from ice dams or leaking siding.

Insist that the inspector pull the electric box to check for problems (corroded connections, aluminum wiring). Ask if he seems any evidence of water intrusion in the basement or attic or if there is any sign of insect or fire damage. If necessary call out a separate expert to check the condition and efficiency of heating and air conditioning systems.

Are the appliances new? If so are they of reasonable quality and with a factory warranty? If they are not new, are the heating elements working; the dishwasher tub relatively rust free; is the energy rating one that won’t break the bank?

Carpeting and resilient floor coverings can be new and still be a piece of garbage. Cheap carpeting will not hold up and will be unpleasant to walk on barefoot or for a baby to crawl on. Inexpensive vinyl floor coverings do not always adhere properly, may tear easily, and often quickly lose shine and stain resistance.

There is nothing intrinsically wrong with a flip. Many investors do a fine job of returning distressed properties to useful life and there are many good deals out there right now. Just know what you are buying, go for a bargain if that appears appropriate, and don’t be blown away by a slick job of cosmetic repair.

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