Over 50% of the houses sold in the Orlando market as a whole have been cash deals, according to ZILLOW. ZILLOW’s research attributes most of these sales to investors who’ve purchased homes in typically in poor condition. Generally these houses were bought under market value and renovated to resell quickly – or “flip” – for a profit. Usually, the focus of renovations is interior finishes and fixtures: fresh paint and new flooring, and updates to kitchens and bathrooms. Investors put their money where it shows, and where they expect to get high return on their investment. This sometimes means that they’ve ignored not-so-glamorous, but important components like roofing, HVAC systems, and water heaters. And, to keep their costs down, they often hire handymen to do the work rather than hire licensed contractors. Not all flipper houses are problematic, but potential buyers may find that everything looks great on a walk-through only to have their home inspection reveal costly issues after the sales contract is signed. Here are a few things to look for when going on a walk-through evaluating an investor-renovated house:
- Bathroom tile that has been painted over. It looks good now, but the paint will begin to peel shortly after you move in.
- New bathroom vanity that is not attached to the wall. This is a safety hazard that can lead to plumbing problems.
- Roof that has been pressure washed to look newer than it is. This cosmetic improvement actually shortens the life of the roof.
- Ancient water heater and air conditioning system. In addition to potential repair or replacement costs, you may soon find your electric bills are shockingly high due to appliance inefficiency.
- No electric receptacle in the bathroom. Older homes had a receptacle in the base of the light over the sink, but new bathroom light fixtures don’t have them – leaving you a bathroom with no place to plug in anything.
- Older garage door. Perhaps it is spray painted, but in poor mechanical condition or the automatic opener is outdated and lacks proper safety features.
- New interior doors. Check that they latch and properly stay open.
- Laminate wood flooring. Look for buckling, a sure sign it’s installed too tightly.
- Newly enclosed porch or garage. Look for air conditioning vents in the ceiling.
After the walk-through, introduce yourself to the neighbors. They are a great resource and can share the home’s history, the condition it was in before renovation, how long it was unoccupied. If you remain interested in the house, check with the local building department online or in-person to confirm that the repairs and improvements were done under a building permit with a final inspection. And, it’s especially important to get a professional home inspection on an investor renovated house. The inspector will delve deeper into the home’s condition, opening the electric panel to examine the wiring, walking the roof, checking out the attic, testing the HVAC and appliances, operating the doors and windows, and evaluating multiple other components. Find out what’s under all those sparkling new finishes before you buy. A professionally renovated older house can be both a good buy for you and a profitable investment for the renovator, but not all “flip” houses are as wonderful as they first appear to be. All too often, a flipper house is “granite counter tops and a bad roof” – and it’s definitely buyer beware!