In my profession I get to see a lot of homes that were bought for investment purposes.
Many of these homes will bring a profit for the Owner. Some on the other hand, will be a huge liability for their Owners because the Owner did not do his/her research.
Many flippers only think about the cosmetics of a home when purchasing it. Failure to have a thorough inspection of the structure, electrical, mechanical and plumbing can lead to repairs equalling what they paid to rehab the home.
I had a buyer purchasing one of these homes from one of the large corporations that purchase "anyone's home for any reason". They'd done a pretty good job of fixing it up cosmetically, however there were serious issues concerning the framing and electrical.
I found undersized braces in the attic as well as cracked and broken rafters. The electrical system was outdated and looked like an amateur had wired the home, including the breaker box.
Long story short, my Client walked away and the Coroporation had about $10,000 more dollars to sink into the home to make it safe.
Sadly, it's usually the first time investor who get's stuck with these homes. For whatever reason they fail to have the home inspected by a Professional Inspector. Only when the Buyers inspector shows up are they aware that there are major issues with the home.
Even on smaller homes less than 2000 square feet, it doesn't take many structural repairs to eat through 10 to 20 grand.
Before deciding on purchasing a home for flipping, have a competent home inspector look it over. Expect to pay between $300 and $600 for a 2000 square foot home. Consider it money well spent. Beware of cheap inspectors. Like any profession, if a company is dirt cheap there is a reason. You get what you pay for!
Donald Lawson is a Professional Real Estate Inspector licensed in Texas (#5824) and Oklahoma (#454). He currently owns and operates V.I.P. Home Inspections, a multi-inspector firm in Houston Texas. To find out more about home inspections in Houston Texas or about Houston Real Estate, just click any link in this resource box.
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