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Updated 16 days ago, 11/25/2024
Buying from a flipper vs. primary homeowner vs. BRRRR for OOS
To help out new investors and the many DMs I've gotten from Californians looking to buy OOS, I have many questions for our experienced investors. I bought from a primary homeowner in Indianapolis metro area who took really good care of this home (I did live in this house and rented it out when I moved back to California) and from a flipper in Indy more recently.
As far as primary homeowners, they can range from taking really good care of the house to someone who has a lot of deferred maintenance - I renovated a local property that had a lot of issues.
With the Indy house I bought from a flipper, I have had 9 repair calls out of 12 months from the tenant. It went through a full inspection and there were minor repairs ($1500) - in retrospect, the inspector missed some things.
I was told by contractors that a home may pass an inspection but once someone is living in it and putting daily stress on the house, things will start to malfunction. And that it takes 12 to 18 months for a house stabilize (no repair calls for 4 months so far). I didn't walk the house prior to making an offer and prior to closing. I won't ever close on another OOS property without walking it first but that involves paying for lots of flights and hotel/rental car costs if flying out there to make an offers but the $1500 to $3000 would be worth the cost to me to save on future headaches.
Another investor said I shouldn't buy properties from flippers since you don't know how good the renovation. But if do a BRRRR from far away that's risky too, without a really good and trustworthy team in place and lots of checks and balances (security cameras, someone local to check on your property) and the ARV and refinance aspect can be challenging.
When interviewing inspectors, what questions should we be asking? Should a sewer line scope be done on all properties or those that were built before a certain year? If we have reasonable assurance that the pipes are PVC, can we skip the sewer line scope?
If we are checking property tax records, should we not buy a home where different LLCs (investors) have owned it and sold it every 2 to 3 years? Some investors own in their personal name so that might be hard to tell if it's primary homeowner vs. investor.
Would you recommend to new investors to not do a BRRRR unless they've done a local renovation or know a lot about construction? Thoughts about buying with a turnkey company vs. with an agent if buying move-in ready?