by Jacques Poujade
An investment trend that has been on the uprise over the past few years is house flipping. If you’ve been following my blog, house flipping is something I’ve talked a lot about.
There is a common misconception that people have when they go into house flipping; that any fixer-upper is a good investment. While that may be true if you have endless funds, sometimes fixer-uppers will cost you way more money than you will receive in return.
So what are the warning signs that a fixer-upper is a money pit? Let’s take a look.
When you go to check your potential investment property, one of the first things you should be looking at is the foundation of the house. Cracks, moldy basements, outdated masonry, and walls that bow are all immediate signs that the foundation of the house is not in good condition.
While all these problems can be fixed, it is likely it will cost thousands of dollars.
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Another major expense and tedious repair to tackle is outdated electrical wiring. Even if it seems to be working properly, it doesn’t mean it’s sustainable.
If you can’t tell whether or not the fixer-upper you’re looking at is outdated, make sure to bring an engineer along to the initial inspection to verify what kind of work needs to be done.
If your potential investment property is already home to various creepy crawlers, that’s an immediate tell that it may not be worth your money. Not only can getting rid of them be a costly job, but if there is any damage done by wood-boring insects such as termites, the repair bill will rack up rather fast.
Even if there are no current infestations, signs of previous attacks are a sign that it could happen again.
Uneven Walls and Floors
The infrastructure of the home is just as important as the foundation – and just as costly. Take a thorough walk through to make sure all the floors and walls are sturdy and even.
While these signs don’t necessarily mean the house is in poor condition, wavering walls and floors can lead to problems further down the line that can be quite costly. Always ask a contractor about the condition of the infrastructure if you are unsure.
The “As Is’ Clause
Perhaps the most important piece of advice I can give to anyone looking to buy a fixer-upper that won’t drain their wallet is to look for the ‘as-is’ clause in the contract. The ‘as-is’ clause states that you agree to buy the house in whatever state it’s in, despite how many issues it may have.
Houses with the ‘as-is’ clause are also usually not available for a mortgage, which is risky for those with a lower budget.
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