How to identify poorly done flips

Question

I'm just starting out building my rental portfolio after recently retiring.  I plan to be adding 3-6 houses a year for the next few years, but nearly everything in my area is a new flip.  I'm not opposed to the flips as I'm not really interested in a fixer, but I know some people in my area who have bought recent flips and have found a lot of mistakes and cut corners.  What's the best way to stay ahead of that and not buy someone's cheaply, poorly done flip?  I know we will get each home inspected after the offer is accepted, but is there anything else we can do or anything else we can look for?

Lucia Rushton · Answer

@April Hamm. If you are investing here in DFW, then first find your investor professional realtor and walk properties. @Steve Garcia can share how much he learned when we walked properties for his recent investment.

Not everything today is a flip, but yes knowing what to look for and what you are willing to either manage or fix yourself is also important because you will never find a perfect home ( in my opinion). Best wishes

Joe Funari · Answer

@April Hamm I always recommend doing a walk through with my clients before submitting an offer. I have done many rehabs on both rentals and flips. I can easily spot issues. One that is easy to spot is if the water heater has a drain pan that actually drains to the exterior of the home. Another is GFCI outlets in all "wet" areas. These are code requirements that many older homes didn't require when they were built. And most often are items that inexperienced investors miss on flips. Make sure you do get the home inspection done. I work with a licensed home inspector that knows what to look for regardless of your exit strategy. He has been doing inspections for many years too. But if your looking for move in ready I recommend you work with a realtor that is a fellow investor like me. I have been helping other investors buy and sell throughout the DFW area. I will teach you what to look for too. Words are free. Hope this helps you in your search.

Nathan Gesner · Answer

In my experience, you can usually see the red flags if you are paying attention to the finishing work. If they do poorly on the finishing work (trim, paint, caulking, etc.) then they probably did poorly on the major stuff.

Mike Hasson · Answer

In lieu of experience, you may learn a lot by following as many home inspector's social medias as you can find.

You'll see all kinds of stuff that will open your eyes to the kinds of things that you might want to be looking for that we run into every day.

some of my personal favorites are:

https://www.instagram.com/cros...

https://www.instagram.com/cyfy...

https://www.instagram.com/home...

https://www.instagram.com/bpin...

You can probably find some local to the area your looking too, That'd also be a good way to find a home inspector you can trust to hire once you get properties under contract.

Ben Scott · Answer

Oftentimes, bad flips use a whole mess of paint to cover up structural or termite issues. Make sure to check the age of major systems; HVAC, water tank, roof, etc. Make sure the electrical box has been updated to modern standards. So many bad flips can look great in pictures with beautiful kitchens and bathrooms but the nuts and bolts are a disaster.

Jevon Shaw · Answer

Everything as far as identifying a bad flip has been covered well already, but if you're ever stuck on the fence you can negotiate to have the seller pay for a home warranty for a couple of years. It won't cover everything, but it will help.

Wale Lawal · Answer

@April Hamm

You should have a team of real estate professionals that will identify the issues in houses you look.This will shorten your learning curve and save you a lot of headaches as they tend to understand the market better.All the best!

Mark S. · Answer

@Nathan Gesner Exactly! I have found this to be the best indicator. And I am speaking as an experienced ‘flipper’ (s as l though I hate using that term for my jobs!)

Danny Polanski · Answer

Cheap flips are all over. Good on you to realize this.

I would ask for the contractors contracts since you need this for warranty, and verify the work was done.

Things like putting cameras down each drain, checking all electrical, using an inspection camera between walls, checking for ice and water shield, proper waterproofing in shower by removing escutcheon plates, opening up the attic to see the roofing and trusts/joists, foundation inspections, catch basin inspections, is the bldg insulated properly, are windows installed properly? Water shed? Show up within an hour of a heavy rain, snow, etc.

Some things are easy to hide. Some things are not as easy to hide. Look for obvious defects as well (but usually the shortcuts are hidden).

And last but not least, make sure all permits were pulled.

Natalie Schanne · Answer

@April Hamm - the best strategy for you is to start to buy direct from seller (or the ugly dated houses on MLS) and make your own renovations. Then you know about the renovation and YOU can choose whether to put in good piping or mediocre piping. I was surprised when I had a licensed plumber use shark bite in an inaccessible spot behind the shower, so all my brand new tile was likely to get busted out WHEN (not if) it leaks. “Oh don’t worry about it” they always say.

Any corner you cut now, is potential maintenance in the future. I’d rather that I choose those corners or I slow my rehab to do it right. :)

How to identify poorly done flips

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