Estimated reading time: 9 minutes
What is a flipped house, and why would someone want one?
A flipped house is purchased cheaply and renovated for a fast sale to make a profit.
If there’s a market to make money in, it’s 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 at least 50 houses before we sold our soul.
Two of all the houses we viewed 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 essential.
Before you embark on home ownership, I’d also suggest using a budget that includes a mortgage payment.
Flipping Houses Are Not For The Faint Of Heart
Taking on projects like a flipped house is not for everyone, as the contractor must 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 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 a flipped house’s walls or hidden spaces should be worrisome.
There are house flippers who take pride in the finished product and others who buy a flipped house with a bad name.
If you are looking at a flipped house and your dream home, you must 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 constantly.
The idea is to wow potential buyers looking for a home without anything to fix or upgrade.
Buyers interested in a flipped house want a house they can move in and enjoy.
You may hear or read the term “Move-In Ready,” although used for any home that has been renovated.
So, who is buying the flipped house?
- Older people who have been there do that and 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 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 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.
A flipped house is far more appealing than a new or custom-built home.
Our cookie-cutter home was a new build in 1995; 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 must be aware that sellers are shady too.
Also, don’t assume a new build is better because mistakes and dirty quality have been horrendous.
Buying a house can confuse anyone, and that is 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 they must follow?
Not all of them do, so be aware of what you tell your realtor, home inspector, or trades experts.
Common Flipped House Problems To Look Out For
Whether you want an inspector’s flipped house inspection completed, 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.
Remember that the same problems can be found in a new building 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 water sources (bathroom sinks, basement sinks, 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 correctly?
- Check for a new roof completion date and the type of materials used, and correct all vents.
- Inspect any home skylights to ensure they are adequately sealed and have no leaks.
- Open anything you can turn off or on to ensure it works properly.
- 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 ensure 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 is a quick flipping project.
For example, if you need to replace an incorrectly fitted kitchen, it could cost thousands of dollars.
A flipped house will have the cheapest materials possible with hidden horrible renovations.
Another possibility is a flipped house using the cheapest materials, which looks fantastic but will eventually need to be replaced.
Quality is essential especially if you want your renovations to last.
You may also find a flipped house where the contractor makes 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 bought an unfinished home.
He gave me many great tips, such as buying an all-brick house and hiring the trades to do an inspection.
My father is an electrician, and I learned from him over the years, which has come in handy on numerous occasions.
Although hiring individual tradespersons may cost more, it is a small fee to pay for shady workmanship.
Name a few trades and professionals you may want to hire for a home inspection on a flipped house.
- Roofing Company
- Window and Door inspection
- House Builder or house construction expert
Even if you have to pay around $500 for each trade inspection, it will be worth it.
Remember, when you buy a flipped house, you take on any problems 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 let buyers see what work went into a home.
Seeing the before and after photos might 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 outside 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 your life stage.
For example, a retired couple may want a finished bungalow, whereas a flipped house might work.
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 immediately, but they occur after you’ve lived in a home for a while.
I’d bet there are more issues with a quick flipped house than a new build.
Even then, I’m leery, so our next home will not be finished.
If in doubt, talk to the neighbors 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.