Author Topic: First Time Home Buyer - Avoiding A Flip  (Read 913 times)

bbelgard

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First Time Home Buyer - Avoiding A Flip
« on: December 10, 2018, 09:06:33 AM »
My fiancťe and I are beginning to look for a home and weíve run into one item that we donít really see 100% eye to eye on.

We have looked at some open houses and have seen a few with our agent and my future better half tends to go a bit gaga for some renovation/flip tropes that I am much less excited by (stainless appliances, granite/quartz counters, crown molding, new cheap cabinets, fresh paint etc).

I donít have any desire to buy a place that needs to be gutted to the studs, but I am fairly handy and donít mind doing finish carpentry and paint work myself, and am looking forward to the sweat equity you can gain from those projects.

My concern with this is that I view flips fairly dubiously (even when done well) because of the profit motive. I believe very strongly in aligning incentives and even honest people will subtly (or not so subtly) make decisions in a short-term profit driven way. In short, anything with a positive ROI has been done, and while the work might be good, itís all been done by someone who wonít be living in the house in 5-10 years (when poor work really begins to show).

In my mind, the best possible outcome from a flip is still not great. Youíve paid to turn a rundown home into a nice, safe place to live and have also paid for the profits + 6-12 months of interest on a construction loan.

Am I wrong in my thinking here? If not, what are some ways you have helped a SO see past the shiny gadgets when buying a home?

Finallyunderstand

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Re: First Time Home Buyer - Avoiding A Flip
« Reply #1 on: December 10, 2018, 10:29:34 AM »
You're right and wrong at the same time.  It truly depends on who flipped the home.  You could ask your agent to ask the seller which other homes they have flipped (maybe some a few years ago if possible) and then also ask if they have contact info for the people who bought those homes.  If so, call them and see if items of poor quality have started popping up.   

Essentially you're getting job references on work quality. 

Jon Bon

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Re: First Time Home Buyer - Avoiding A Flip
« Reply #2 on: December 10, 2018, 11:47:03 AM »
Yeah you pay a premium for that too, so going with the dated home definitely saves you a bunch of money.

A good inspection here is key, and I dont mean a home inspector those guys are pretty worthless. Basically someone who can look at things and see what type of work has been done. Flippers tend to only spend money on things people can see. So yeah paint, appliances, kitchens baths. A flipper would NOT spend money to update old wiring, insulation, plumbing, or roofing unless they were forced too.  So having to rip apart your newly finished house to remove dangerous wiring and property insulate would suck to have to do.

IMO this is especially true today.... have you seen the prices of subs and materials right now? The incentive to cheap out on some shabby work and materials is crazy high. Remember all those houses built with shitty Chinese drywall the last time around?

If you do settle on a flip, yes I would ask for references. This however even has it limits as in if jimmy the good plumber worked on the last house, but moved onto a better job, and they brought in Johnny the bad plumber. Trades can change pretty quickly on you.

I feel like I am making both sides of the argument here.... I guess its hard to talk specifics without putting my eyes on a particular house/issue.


waltworks

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Re: First Time Home Buyer - Avoiding A Flip
« Reply #3 on: December 10, 2018, 12:14:41 PM »
You are in general right about buying a flip. But your fiance has a say in this too, so you may want to help prime her/him to appreciate the possibilities of DIYing some stuff in an otherwise meh sort of house. Go to a big home store and play around with their kitchen and bathroom design stuff - get your SO excited about the whole idea of buying something that need some work.

If that doesn't work, just buy what the SO wants as long as it's not ridiculous. Your relationship is more important than spending/saving some money on granite counters.

-W

theoverlook

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Re: First Time Home Buyer - Avoiding A Flip
« Reply #4 on: December 11, 2018, 08:16:54 AM »
I don't think buying a flip is any more of a bad decision than buying a house that the previous owner fixed up. Homeowners are terrible contractors on average so despite doing the work for themselves, in theory to live in long term, they often do as bad or worse of a job than a house flipper. The question is really: should I buy a finished house or a fixer upper, and that is a question that only you and your fiancee can work out. I will say, working on a house while you live in it is pretty tough, and if the other party in your relationship is not on board in the beginning, it will only get worse when they are inconvenienced by the construction.

Another Reader

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Re: First Time Home Buyer - Avoiding A Flip
« Reply #5 on: December 11, 2018, 08:49:43 AM »
I have bought a number of houses over the years.  The majority were for rental purposes.  I look at maintenance rather than updating when I am house shopping.  Is the roof in good shape and reasonably new?  Are the fascias painted and in good condition?  Did they buy and maintain high quality HVAC components when they replaced those systems?  How is the hot water heater?  Are the cabinets and floor coverings clean and in good condition?  I love to buy Grandma and Grandpa's house that they owned for a long time and took care of during their ownership.  Most people lead busy lives today and are not interested in updating a house.  I get a better price and better bones with my approach.  Paint, flooring and kitchen counter tops are cheap compared to dealing with a lot of hidden problems on a poorly maintained house.

affordablehousing

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Re: First Time Home Buyer - Avoiding A Flip
« Reply #6 on: December 17, 2018, 02:50:16 PM »
If you need a rule of thumb, I think it's reasonable to just avoid flips. When you are looking through the house, even a flip, make sure to spend a lot of time looking at the attic, the utilities, the crawlspace or basement and the foundation. Try to think about the drainage, and bring a screwdriver and flashlight so you can discreetly press on trim with the screwdriver and see if there's any rot that's been painted. I think the old rule of thumb is best - buy the worst house in the best neighborhood you can afford. In the end it will pay off.