Fixing House Flipping Mistakes
When you are a house flipper, you mean business. You know what it will cost to purchase the home. You know what it will take to make the needed changes in order to successfully flip it. Also, if you play your cards right, you know what it will go back on the market and eventually sell for after the flip.
You are calculated, organized, and methodical in the properties you purchase and it pays dividends! You know how much your mortgage will be and how long it will take you to make the renovations. You even have additional time built in for any unexpected delays. You are a professional and you make money on house flipping projects like this all the time. However, that doesn’t mean there aren’t pitfalls. That IS why you planned for them in the first place, isn’t it?
What if you underestimated those delays or something was missed during the initial inspection? If 2020 and 2021 have taught us anything, it is that even when you are prepared, a pandemic can come out of left-field and cause a whole new set of problems!
Those problems can end up costing you big bucks and in some cases, you just need out from under that new mortgage. Sometimes that initial investment wasn’t worth it and you need to cut your losses before you dig yourself into a deeper hole on that investment property. Sometimes when you think you can flip a house and sell it quickly, you end up just needing to sell.
House Flippers Worst Nightmares
House flippers are problem solvers. They face endless amounts of unforeseen problems as they flip homes. In fact, if you flip houses, you probably have a sixth sense for when something isn’t adding up. You know the smell of mildew in a basement that is hinting at water damage, you know which walls are retaining walls, and you can spot termite damage from a mile away. You also know how to anticipate issues before they happen. It comes with the territory, right?
That doesn’t mean you aren’t surprised every now and then, and when those surprises hit, you are ready to hit the ground running… away from that project. You know now when it’s time to cut your losses and get out before you dig yourself deeper. You know when it is time to abandon your flip and sell that property FAST!
Abandon Your House Flip When Trouble Hits Your House
There are so many unforeseen issues that would make you question if you should abandon ship. Here are some of the most common ones:
1. Termites and Termite Damage
Termites are any homeowner’s worst nightmare and for an investor, it is a HUGE expense you might not have even anticipated. You did your due diligence in getting an inspection, but even the best of inspectors could miss a termite infestation or old termite damage. If that happens, you could be fronting a much bigger bill on repairs.
Active Termite Infestation
If you have an active termite infestation, you will need to work with a pest control expert. Breaking down those costs, you are looking at:
- Termite Inspection // Consultation – $200
- Termite Fumigation – $1,280 to $3,000 at least.
- Multiple Treatments Needed – $200 to $900 /treatment
- Time – A day away from the home for each treatment.
In total, you could be looking at anywhere from $1,680 to $4,100. That can eat a pretty big hole into your profit margins when you sell, and that is just to remove them! Now you have to deal with their leftover damage!
Regardless of an active infestation that you have to get rid of or if you just found old termite damage, it is costly either way! Termites take massive beams and turn them into sawdust from the inside out. When you find those hollow beams, it is sure to make your stomach sink, your heart drop, and your pocketbook tighten.
Replacing a few floorboards or crown molding can end up costing you $200, but the real money comes in when you have extensive termite damage to the subfloor and foundation of the home. This could cost you anywhere from $700 to $3,000.
If you weren’t prepared for those additional costs, you could be looking for a way out!
When you are flipping a house, time is money. Time is additional mortgage payments, time is lack of progress, and time is everything. For that exact reason, delays cost you money. Unfortunately, we are painfully aware of delays as COVID-19 and shipping delays have made us more familiar than ever in uncertainty. Delays can come in many forms:
- Delays in Permit Approval – Waiting around on a permit to start your work is like watching money burn. Every day the house sits without progress, every day your timeline gets longer, and every day your mortgage payments just keep coming.
- Delays in Supplies – You can’t paint those cabinets if they haven’t arrived, you can’t lay that prefinished hardwood if it isn’t there, and you can’t put those countertops in the bathroom if the granite hasn’t shown up. Delays in supplies could cost you.
While a day or 2 delay here or there might not seem like much, they can really add up and cost you a whole mortgage payment! You might have already prepared for this and even built it into your original budget, but what happens when your permit is 3 months late? You could be looking at a large sum of money just going to mortgage payments without any real progress to be had on your renovation. That is enough to make any home investor sweat.
3. Water Damage and Flooded Basements
Homeowners cover up water damages all the time. Whether they are painting over old water stains or concealing a huge flooding issue, it happens. As the new homeowner, you have every right to contact the previous owner and get compensated for those issues. However, you are still left with that property and those repairs. When water damages are left unchecked, it can spread like fire throughout your home. One leaky pipe can cause mold and decay throughout the home. If your basement flooding is left unfixed, you could be looking at a compromised foundation. When you have ongoing issues with water damages, then you need to not only repair the area, but prevent it from happening in the future. You could be paying a hefty cost when it comes to water damages:
- Repairing Surrounding Areas – Just to repair the area surrounding the leak, in the warpath, could end up costing you anywhere from $3,000 – $9,000. When you have to go in and replace the original structure of the home, drywall, paint, sand and replace flooring, it is no wonder you could be looking at thousands and thousands of dollars.
- Compromised Foundation – If you are looking at a rotting subfloor or cracked foundation due to water issues, hiring a specialist to check the damages will cost anywhere from $500 – $1,000. Once the damage is realized, expect to pay an additional $5,000 to repair the issue.
- Electrical Damage – This is not only extremely expensive, but a huge hazard to anyone within the home. Just to get the home rewired would cost $2,000 to $6,000.
At this point, we aren’t even looking at the repairs to fix the broken pipe or waterproof the basement. Just to restore a basement from the flooding, you are looking at anywhere from $2,000 to $15,000 in costs. To fix the broken pipe, you are looking at a cost of $500 – $2000. With that much money at stake, any investor would consider cutting their losses by forgoing the repairs and trying to sell as-is, water damage and all.
4. Old Sewage System
Sewage systems are used to wash away waste and contaminated water from your property. Typically in most homes, these systems are newer or built to last. However, there are still homes where you will find the original clay sewage pipes in place. Those older clay pipes are then often connected with the newer systems. This can compromise the original sewage line and cause cracks or breaks. If you happen to be the unfortunate homeowner that ends up dealing with a new crack in the sewage system, you could be looking at some huge costs:
- Septic tank repair – If you find that the source of the sewage system leak or break is in the septic tank, you could be looking at anywhere from $750 to $3,000 in damages.
- Tree roots in a sewer line – This is a common problem many homeowners will face, particularly if your pipe system is made out of a more flimsy material like clay. If roots are neglected, ultimately they will grow into bigger roots and grow through your pipe. Expect to pay $100 to $600 for tree root removal.
- Blockage – This can happen when owners flush an excess amount of “flushable” products down the drain and create a blockage. Sometimes you’ll notice symptoms like gurgling noises in the pipes, all the drains slowing down in your house, and water from one fixture ends up in the other (like water from the laundry ending up in the bathtub.) The entire procedure of hiring someone to unclog your sewers costs $2,000-10,000.
These are big costs to an investor who is looking for a fast and easy house flip. Chances are, no one even knew about the sewage system problems until you took control of the property. Now, you could be looking at the costs to repair those issues before selling again.
Get Out From Under That Bad Investment with House Guys USA
When you have an investment property that went wrong and you need an out, or when you need to sell that house “as-is”, call House Guys USA. House Guys USA buys homes “as-is” in any condition for cash. If you have an investment property under or partly under construction and you need out, House Guys USA can make you a fair cash offer in as little as 7 days.
Sell your house quickly! Call House Guys USA at 816-892-2132 for further inquiries, or to get a free quote.