As you look for homes for sale in Los Angeles, some of the best deals will be flipped houses. There are some obvious financial benefits to buying a flipped house, but there may be hidden risks as well that make it not worth the initial savings.
We can help you identify a home that is a great investment in Los Angeles, depending on our network of professionals who can inspect and appraise the property, as well as our years of experience. Contact us any time to learn more about finding your home in Los Angeles.
What is a flipped house?
A flipped house is what those in the real estate industry call a property that was purchased, quickly renovated to increase the property value, and then sold again as soon as the renovation was complete. This is a real estate investment strategy that can be extremely lucrative for those who have figured out how to do it well.
In some cases, a flipped house is one that simply needed cosmetic updating to look new again and sell for a higher price point. Investors can purchase the home, update it to look fresh and new, and sell for a significant profit. In other cases, a flipped house will have required some major repairs that go beyond cosmetic updates.
How can I tell if a house was flipped?
You will almost never find a property that comes right out and says it’s a flip. Instead, the listing will say things like “newly renovated” or “recently updated” and the finishes in the home will obviously be newer than the year the home was built.
Identifying a flip, in contrast to a personal home that was just updated or remodeled before selling, can be tricky. Here are some clues that can help you see that the house was indeed flipped:
- Find out how recently the home was last on the market. If it was purchase under a year ago and is back on the market in a new color or with new interior finishes, it is likely a flip.
- Look for an emphasis on cosmetic updates without much attention paid to major systems in the home. A home that has quick fixes applied to plumbing, HVAC, or the roof while having brand new flooring and lighting might be a flip.
- Find out more about the sellers. If it is being sold under a corporation or an LLC, especially one with multiple properties for sale at a time, it is likely being sold by investors who flip houses regularly.
- If you are extra savvy, you may be able to strike up a chat with neighbors during a showing to find out more about the property.
What are the risks of buying a flipped house?
So why spend all of this time finding out if a house was flipped? The bottom line is, there are some risks involved with buying a flipped house because investors do not always renovate with quality in mind. It is common for house flippers to complete the renovation as quickly and inexpensively as possible to maximize profit, even if this means cutting some important corners.
Make sure the beauty of the home isn’t just skin deep by working with a trusted home inspector and paying careful attention to the inspection report. One of the risks of buying a flipped house is thinking you are getting something that is updated and renovated, but finding out after it is too late that there are major, expensive repairs to be done that have been covered up by a pretty design. Avoid getting emotionally attached to the property before finding out what the inspection report has to say.
There is also a risk that the work was not done by a licensed contractor and completed up to code. You can end up in an expensive or dangerous situation if this is the case, so take your time to be confident about the condition of the property before closing on it.
What are the benefits of buying a flipped house?
While there are certainly risks involved, buying a flipped house can also be a great investment. When the flip was done well, you can end up with a home that feels brand new and updated, without having to live through the stress and unpredictability of a renovation.
Flipped houses tend to be priced competitively, as the best way for the flippers to make money is to sell them quickly, taking the equity and re-investing it in the next flip. This usually means you can benefit from a good price and a quick closing process, in a home that is ready for occupancy as fast as you can close. Buying a move-in ready home that is ready for an efficient escrow process may be worth the potential risks of buying a flipped house; just work with a qualified team of local experts who can help you make the right investment.