When house prices are rising flipping houses becomes more popular to investors. Lately at Preferred Residential we are seeing more real estate investors coming into the real estate market with the intent of flipping. House flipping is defined as buying and selling a property within a six month period.
There are some inherent dangers in flipping houses and one of those is not being exactly sure about what surprises might be lurking in the house you buy. Houses requiring unexpected repairs can throw a wrench in the timeline and the pocketbook leading to reduced profits or even losses.
A good way to avoid losing money is to have the home you are thinking about buying professionally inspected. Pay for a professional inspection? That is heresy to many investors who flip houses. Why pay $500 when “I know houses and if I waive the inspection contingency it will make my offer look much more attractive to the seller?”
The answer is: Because you don’t know everything about houses and even something as readily visible as stucco siding can ruin a flip. We just had buyers in a multiple offer situation NOT waive an inspection and boy are they thankful now. The inspection found some issues in the stucco siding which made the buyers ask more questions. After some research we found that the siding process used was extremely rare and three different siding contractors told the buyers they didn’t even know how to get it off the house.
Think of it from a return on investment perspective. A thorough inspection can save a person flipping houses thousands of dollars. It can mean the difference between a profitable flip and one that puts you out of the house flipping business.