House flipping?

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Old 02-10-19, 11:33 AM
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House flipping?

This is just a curiosity question. I have no intention to flip a house or buy a flipped house. But I am wondering what the general consensus of the quality of flipped homes. I don't mean those houses on programs from HGTV or similar. I mean the house flippers that every city has, and are they considered decent construction quality or do they tend to just make the surface look good? I understand there may be a range from bad to good, just like every profession, but in general, assuming they meet local codes are flipped homes a good deal or a bad deal compared to the typical house buying from an exiting live-in owner? Any comments?
 
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Old 02-10-19, 11:38 AM
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I think it depends on what you are looking for. If the workmanship is decent you have a turn key home and that can be important to many folks. But so much depends on the flipper, if a high priority is put on maximum profit then the house might not be as good as it looks.
 
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Old 02-10-19, 11:56 AM
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Yea, it's hard to determine quality.

Years ago my father-in-law, along with with a fellow steel plant worker, would buy burned out homes that still had structural integrity and remodel and "flip", although that was not the term used way back then. Just by knowing who (and my FIL built his own home) , I was assured of the high quality being put into the work and material. The son's of his co-worker turned the side business into a full home remodeling company.

I currently know of a female "flipper" (who by the way is very successful in several business), that buys "sale" items as much as possible. But that seems to be the question that sticks in my mind! She gives the impression that she will only by the cheapest materials to maximize her profit. That's not a bad thing, but she keeps inferring that the jobs needs to get done in record time. Kind of gives me pause if I was to buy from her. To be fair I never saw any of her work, so I;m just surmising.

I think the best way is to talk to previous buyers and get their opinions.
 
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Old 02-10-19, 01:29 PM
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It would be hard for many of the experienced contractors here and elsewhere to buy a flip. Not only do they have to cut corners, they have to make a bundle on each flip. Similar examples but even if they never cut a corner they will jack up the price to as high as possible.

I have a neighbor's home that recently sold and the contractors have been all over it. Haven't seen any sign of a new owner so I'm assuming a flip. Given what was listed for the selling price plus a total gut it will have to be the most expensive house (per dq ft) in the town. it will be interesting to see if it goes back on the market.

It could just be someone who wants to live right there and they don't care what it costs. Someone coming from Boston would have money coming out of their ears.

I've looked at a few flips for other people and didn't like what I saw.

Bud
 
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Old 02-10-19, 01:43 PM
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Originally Posted by Norm201


are flipped homes a good deal or a bad deal compared to the typical house buying from an exiting live-in owner?
Primarily depends on the initial quality of construction of the HOUSE, secondarily depends on how many people are getting a cut of the sale price.

I have clients who buy houses to fix and rent, or fix and flip, they prefer post WWII brick ranchers in the burbs OR the pre WWII brick rowhouses in-town. That is because these homes are generally well built and "there's only so much that can go wrong".

The WWII brick rancher is the "timex watch" of real estate, takes-a-licking-and-keeps-on-ticking. They're easy to re-wire, re-plumb and remodel.

In-town row homes have floor drains that are connected to the local storm sewer - even with the electric off, the basement drains. The have party walls, so the neighbor's homes on either side are heated and keep the walls warm enough that the plaster/sheetrock doesn't crack.

For contrast, consider a 3,500 sqft McMansion, sat vacant, basement flooded. Basement was finished, that wrecked (wracked) the house.
The sheetrock gets wet, gets moldy- actually an easy fix, rip it out. Problem is that wooden partition walls sitting in water swell, which lifts the 1st floor, that lifts the 2nd floor, basically every drywall seam pops, and the nails begin to pop- every floor squeaks, and you'll be fixing nail-pops forever after.

Also, around me, many flips are estate sales, there is a cottage industry of people pushing the executor to "sell quickly" at a low-ball price, and then THAT agreement of sale gets shopped around to the actuall flippers at a 10%-20% markup over the price.

Now, you pay rent in advance, (March rent is due March 1), but pay a mortgage in arrearage (March mortgage is due March 31) so most flippers are VERY time conscious, if the flipper can settle before the end of the month, then they can pay the mortgage using the BUYER's money, not thier own cashflow.
 
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Old 02-10-19, 02:54 PM
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Hal,
Very good read and educational as well. You point out things that many (including myself) would not foresee. The financial end and how the money has to get moved is something that is interesting. Never considered the timing.

I'm kind of surprised you say many flippers would prefer older vs newer (30 to 40 or younger) homes. I would think plumbing and electrical would not be close to codes (especially plumbing can be a bear on old dwellings) and much of the structures no longer conform to current standards.

So in general terms, for the buyer, he needs to consider what the house may have been through and possibly the age, while the flipper wants a very quick turn around and cut corner where ever possible.

With regard to Bud's comments. It would seem in today's market (at least here in WNY, a sellers market) I would think the sellers should at the very least get their money invested. Most housing has been selling at about 10% to 20% higher than asking price. It will be interesting to see what this season brings.

It's my opinion that the bottom is going to fall out and many new buyers are going to be underwater. Two of my 5 children (one son and one daughter) are in the housing market to buy, but both are very conservative and are not interested in the current housing pricing. So the daughter will continue to live with us and the son will stay put even thought the house is too small for current family size.
 
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