Fix-and-Flip RENO for Sale-Is it RISKY?

[donksky]

Hello,
For sale by owner duplex in a top 10 Ontario town-partly owned by realtor - great cash flow but they bought it in bad shape,fixed it up & are now selling it. So really, it hasn`t been lived in post-renovation- screened tenants moving in Sept. 1. They want to do this flipping thing so that`s their stated reason for selling although vendor/realtor says he may decide to hold it (hedging/marketing tactic? I don`t know).
I`m concerned `coz how do I know they did a good job & weren`t shoddy, rushed with the repairs/reno? Unlike a new house, this fixed-up duplex has no warranty (can I ask for one?) YET it hasn`t been lived in post-renovation. I don`t know how bad it was b4 renovation, etc. It doesn`t look as solid as a brick house (it`s aluminum siding). Will an inspector catch everything? Should I just skip this or is there a way to protect myself if I buy it? thx

 

[Thomas Beyer]

QUOTE (donksky @ Aug 21 2008, 08:40 AM) Hello,
For sale by owner duplex in a top 10 Ontario town-partly owned by realtor - great cash flow but they bought it in bad shape,fixed it up & are now selling it. So really, it hasn`t been lived in post-renovation- screened tenants moving in Sept. 1. They want to do this flipping thing so that`s their stated reason for selling although vendor/realtor says he may decide to hold it (hedging/marketing tactic? I don`t know).
I`m concerned `coz how do I know they did a good job & weren`t shoddy, rushed with the repairs/reno? Unlike a new house, this fixed-up duplex has no warranty (can I ask for one?) YET it hasn`t been lived in post-renovation. I don`t know how bad it was b4 renovation, etc. It doesn`t look as solid as a brick house (it`s aluminum siding). Will an inspector catch everything? Should I just skip this or is there a way to protect myself if I buy it? thx
any investment has risks .. learn to mitigate them through knowledge !

hire a home inspector .. walk with the home inspector .. and ask loads of questions as he inspects .. even if you do not buy the house it is $500 well spent on your education for the next deal !

Flying in an airplane is risky. Driving a car is risky (even with a seatbelt) ! Crossing the street is risky. Buying Google shares is risky. What investment with decent upside potential has no risk ? Learn the business .. and you will be able to reduce risk considerably !

 

[mark186]

Who screened the tenants - you or them? Is the purchase price based on the property value or is it derived from income?

Also, ask yourself why they are changing their course of action so much.

 

[dplummer]

You pay your money & take your chances. As Thomas has already stated: Hire a good Home Inspector or Restoration Contractor to inspect WITH YOU. Ask questions & learn. There are no guarantee`s in life. Just my 2 cents.

Doug

 

[GarthChapman]

It is good for you to ask these questions. Now put them into the context of the system REIN has given you.

Have you run the numbers? If not, use the REIN Property Analyzer (also found in our REMA software and the numbers will tell you whether to take the next step.

Then follow the Due Diligence Checklist (also in REMA, along with the Goldmine Scorecard) through the decision making process.

 

[Stephen1151]

QUOTE (donksky @ Aug 21 2008, 07:40 AM) Hello,
For sale by owner duplex in a top 10 Ontario town-partly owned by realtor - great cash flow but they bought it in bad shape,fixed it up & are now selling it. So really, it hasn`t been lived in post-renovation- screened tenants moving in Sept. 1. They want to do this flipping thing so that`s their stated reason for selling although vendor/realtor says he may decide to hold it (hedging/marketing tactic? I don`t know).
I`m concerned `coz how do I know they did a good job & weren`t shoddy, rushed with the repairs/reno? Unlike a new house, this fixed-up duplex has no warranty (can I ask for one?) YET it hasn`t been lived in post-renovation. I don`t know how bad it was b4 renovation, etc. It doesn`t look as solid as a brick house (it`s aluminum siding). Will an inspector catch everything? Should I just skip this or is there a way to protect myself if I buy it? thx

I dont belive you can get a warranty unless the different trades who come in provide one for there specific job, for example a roofer may put on shingles with a 25 year warrenty but there may be only 1 year on the labour.

An inspector wont be able to catch everything because he cannot look inside gyproc or see under the ground to your drain tile. but...here are some things i would watch out for in an older house. Aluminum wiring (can only be used with approved wall sockets and switches, and must be tested every 3 years), cracks in the foundation, traces of crystalite or water residue from concrete in the basement...type of insulation used in the wall...ect ect....

a good inspector will catch alot of things but not all things...this is one step you do NOT want to skip...
the only way i can see that you can protect yourself with an older house is to put in the contract clause "subject to home inspection"...hope this helps

 

[donksky]

thanks all, I guess it`s hard for me to do comps coz I don`t have a buyer`s agent in the area...I also hate building/technical stuff-got a Mike HOlmes book from hubby as a gift but it`s as exciting reading to me as my teeth getting pulled