If you're looking at a property with the intention of renovating and remodeling for a profit (Fix & Flip Investing), you need to recognize a bad sign when you see it. If those bad signs start piling up, then a challenging renovation can turn into an absolute nightmare.
You can minimize the potential for losses if you remember these four things to look for when evaluating a property.To ensure you don't get sucked into a money pit, make sure you look for these 4 signs before putting your name on the dotted line.
Sign #1: Partial Renovations
If a full renovation is considered too costly, an owner might go through a partial renovation as a kind of half measure. However, those half measures could hide a much bigger bill if you want to go all the way with your own renovations. As such, you should ask questions about what happened, what flaws (if any) were discovered, and what kind of estimates the current home owners received when they undertook the project.
Sign #2: There Are No Previous Inspection Reports
If a home has been sold before, it should have been inspected before as well. Getting hold of those inspection reports, and looking for any serious problems the house has (even if they're problems which are hard to see from the outside) can be what saves you from a truly expensive renovation. If there aren't any previous reports, it never hurts to get your own inspection done, and to make sure there are no truly serious problem areas before you decide whether or not to buy the home.
Sign #3: Too Much DIY
There's nothing wrong with homeowners using sweat equity to save a little money. However, if someone who isn't a professional plumber or electrician has decided to re-do the pipes and wiring in a home, that's a sleeping lion you should approach with great care. While there might be nothing wrong, and the house's systems are completely up to code, it's also possible that you could wind up finding extension cords running through the walls.
Sign #4: Local By-Laws or Community Councils
Sometimes the problem with renovations isn't the property itself, but rather where it's located. If a home is in a subdivision with a property owners' association, or another governing organization, there are likely rules regarding what you can and can't do when it comes to your home's appearance, size, etc. If you have to work within those rules, that can curtail a lot of your renovation ideas, and you need to be aware of that before you start making too many plans.
These are, of course, just a few signs that a property will be a huge pain to rehab. For other signs, and for tips on how to make your flip rehab investments go more smoothly, simply check out: 4 Things to Look for When Evaluating a Property