What is a flipped house and why would someone want to purchase one?
A flipped house is a house purchased cheap and renovated for a fast sale to turn a profit.
If there’s a market to make money in it’s definitely property flipping run down houses.
Property flipping is so lucrative that we know a family with a custom 2 million dollar home built with their profits.
When we purchased our first home we looked at least 50 house before we sold our soul.
Out of all the houses we viewed two were house flips and both had so many issues that I spotted.
Imagine if we brought the right people in to inspect what else they may have uncovered.
This is another reason why an emergency savings fund is important.
Before you embark on home ownership, I’d also suggest that you use a budget that includes a mortgage payment.
Flipping Houses Are Not For The Faint Of Heart
Taking on projects such as a flipped house is not for everyone as the contractor has to deal with problems and setbacks.
If you don’t have the patience when turning a house for profit don’t bother with this line of work.
Is it really work or just a side job?
The problem with buying a flipped house is that it may look good but may not be what it seems.
What lurks behind the walls or hidden spaces of a flipped house should be worrisome.
There are house flippers who take pride in the finished product and others who buy a flipped house a bad name.
If you are looking at a flipped house and your dream home, you need to decide whether it’s a lemon or a polished apple.
Who Buys A Flipped House?
Generally a flipped house is a total gut job and renovated from top to bottom but not always.
The idea is to wow potential buyers who are looking for a home without anything to fix or upgrade.
Buyers who are interested in a flipped house want a house they can move in and enjoy.
You may hear or read the terms “Move-In Ready,” although used for any home that has been renovated.
So, who is buying the flipped house?
- Seniors who have been there done that and just want to enjoy their retirement days.
- First Time Home Buyers who can’t afford renovations and want a move-in ready house
- Non-handy man/woman
- Persons with Disabilities who might struggle to renovate
- People with kids who don’t want to renovate
- Flipped house is cheaper than other houses for sale in the area
- Newcomers to Canada who would rather not deal with renovations (I was the opposite)
Buying A House Can Be Confusing
Not all buyers are handy even if they think they are.
Don’t be that person who thinks they can do it all or pretend just to appease a partner or spouse.
Can you imagine how much money you’d flush down the toilet with renovation mistakes?
Of course buying a brand new built home is as new as they come however many lack character.
Cookie-cutter homes are still in production, and if you want a custom-built home, it will cost even more.
This is why a flipped house is far more appealing than a new or custom built home.
Our cookie-cutter home was a new build in 1995 and we purchased it in 2009.
I’ve been renovating slowly and ripping walls and floors out, including the mouse-infested basement insulation.
Although our house had one previous owner you have to be aware that sellers are shady too.
Also, don’t assume that a new build is better because mistakes and dirty quality have been horrendous.
Buying a house can confuse anyone and why so much trust goes into the professionals.
- Trust The Realtor
- Faith In A Home Inspector
- Confidence In the Tradesman or Tradeswoman
How professional are they and do they stand by the ethics that they must follow?
Not all of them do so be aware what you tell your realtor, home inspector or trades experts.
Common Flipped House Problems To Look Out For
Whether you want a flipped house inspection completed by an inspector, be aware that they don’t see everything.
I’ve only lived in Canada since 2007, and when we were looking for a house, I struggled as home builds in the UK are different.
The only certainty was that buying a flipped house was not something we were interested in buying.
Keep in mind the same problems can be found in a new build or older property.
Below are some ideas of what to look out for
- The flipped house has no permits.
- Check for gaps that let air in or out or gaps in flooring, walls, windows, doors etc.
- Uneven flooring, poor quality installation, cheap flooring
- Kitchen new or painted cabinets with new handles
- Venting for bathroom fans and kitchen fans
- Central Vacuum and Central Air Conditioner
- Check for leaks from any water sources (bathroom sinks, basement sink, kitchen sink, shower, bathtub, outdoor house or taps.
- Electrical wiring (is it done correctly, or is it a disaster safety hazard?
- Do the windows all match, and are they installed properly.
- Check for a new roof completion date, the type of materials used, and correct all vents.
- Inspect any skylights in the home to make sure they are sealed properly and no leaks.
- Open anything you can turn off or on to make sure it is properly working.
- Inspect the furnace, water heater (rented or owned), water softener, washer and dryer.
- Look at the guttering on the house and the drainage system
- Does the house need a new fence? Is it rotting or coming out from the ground?
- Is the deck in working order, and does it have a permit (if needed) to check any outdoor lighting?
- Are the appliances that come with the home in working order?
- Have a look in the roof space for insulation situation and rodent issues.
- Is the driveway, path, front steps, porch and handrails in good working condition?
- Look for insulation in the garage to ensure it is drywalled, especially if there is a bedroom above.
- Does the garage door need to be replaced? If replaced, what type of quality garage door is it?
- Check for anything rotting around the inside or outside of the house.
- Have the outdoor vents been replaced if needed?
- What does the foundation of the house look like? This can be tough when buying a flipped house during the winter. (that’s what happened to us)
- If there is a cold room, check to make sure outdoor steps or plants do not block the venting.
Save Money To Fix Any Problems You Uncover
When you buy a flipped house, the idea is to expect problems, especially if it was a quick flipping project.
For example if you need to replace an incorrect fitted kitchen it could cost thousands of dollars.
A flipped house will either have the cheapest materials possible with hidden horrible renovations.
Another possibility is a flipped house using the cheapest materials looks fantastic but will eventually need to be replaced.
Quality is important especially if you want your renovations to last.
You may also find a flipped house where the contractor made sure everything is pristine using top-quality materials.
Find out as much as you can before you sign your life away on the biggest expense you may ever have.
Hire The Right People To Inspect A Flipped House
My father-in-law was a contractor who built houses for a living, and he also bought an unfinished home.
He gave me lots of great tips, such as buying an all brick house and hiring the trades to do an inspection.
My father is an electrician, and over the years, I learned from him, which has come in handy on numerous occasions.
Although hiring individual trades persons may cost more it is a small fee to pay for shady workmanship.
To name a few trades and professionals, you may want to hire for a home inspection on a flipped house.
- Roofing Company
- Window and Doors inspection
- House Builder or house construction expert
Even if you have to pay around $500 for each trade inspection it will definitely be worth it.
Just remember when you buy a flipped house you take on any problems that comes with it.
At least with a new build house in Ontario it comes with a Tarion new home warranty.
Tarion is a non-profit, private corporation established in 1976 to protect the rights of new home buyers and regulate new home vendors and builders1 according to the terms of the Ontario New Home Warranties Plan Act (the “Act”).Tarion Home Warranty Ontario
Flipped House Before And After Photos
If your realtor or sale by owner seller has told you that you may purchase a flipped house, ask for photos.
You never know if the seller or realtor will allow buyers to see what work went into a home.
Seeing the before and after photos might even motivate a buyer or scare them away.
If there are no before and after photos go on Google Earth and have a look.
You may only see the outside of the home but even then there may be tell-tale signs of problems.
Is Buying A Flipped House Worth It?
When buying a flipped home the choice is yours based on your plan or the stage of life you are in.
For example, a retired couple may want a finished bungalow where a flipped house might work for them.
With any home, whether it’s a flipped house or not, you’ll find problems, and that’s just the way it is.
The problems may not surface right away but after you’ve lived in a home for a while they occur.
Personally, I’d bet on there being more issues with a quick flipped house than a new build.
Even then I’m leery which is why our next home will not be finished top to bottom.
If in doubt, talk to the neighbours about the house you are considering to see if they have any further information to divulge.
Discussion: Have you purchased a home that was flipped and run into problems? Share your experiences below.