You’ve probably seen plenty of TV shows about house “flipping” right? Flip This House, Flip That House, Flipping Out, Income Property, Property Ladder, etc.
It’s one thing to see the old “fix and flip” properties on TV, but what about actually buying one yourself? Especially as a First Time Home Buyer?
The first thing you should be aware of is that in a lot of cases these properties were foreclosures or short sales, which means they typically had deferred maintenance and needed a lot of repairs. At some point, an investor bought the property and rehabbed the home in order to re-sell it to an owner occupied buyer (usually for a profit).
There are some advantages to buying a “flipped” or “rehabbed” property as your first home.
- Property is in “Move-in Ready” Condition
- Newer Mechanicals/Repairs Completed
- Chance to live in a pre-existing neighborhood with an updated property
- Possible Historic Restoration Character in the Home
But there are also some things you need to watch out for.
- Were repairs done by licensed contractors?
- Did they cover up any serious damages with cosmetic repairs?
- Are their structural issues behind the clean and newer updates?
- Is the home “over-improved” for the neighborhood value?
A good rule of thumb is to see at least 5-10 other homes in the area before making any offers, and also compare flipped homes to ones that may not be completely up to date. Sometimes doing the updating on your own over time can save you money, and you will get to personalize the property to your liking.
Another thing you should do is try to obtain the actual list of repairs completed by the seller/investor who is flipping the property. This may reveal items such as prior mold, fire damage, or structural concerns that even if repaired could resurface in the future with you as the owner. A Seller’s Property Disclosure is usually the best way to verify the work that has been done on the property, and can be obtained by having your buyer’s agent contact the listing agent for a copy.
Either way, make sure you consult with your real estate agent–especially if this is your first home purchase.
Happy House Hunting!!!
