A “Fix-and-Flip” Inspection Is Important
Find It, Fix It, Flip It
June 8, 2018
President and Owner, President and Owner, AJF Engineering & Inspections
Many “fix-and-flip” investors take pride in remodeling projects by using quality materials and licensed contractors, and by making upgrades to old, antiquated systems. Other investors “put lipstick on a pig” by using unlicensed contractors and cutting corners to maximize profits. Unfortunately, the “shortcut” method has become more common in recent years because of lower profit potential in the fix-and-flip market.
A professional home inspection is a necessity for a “flipped” home. Some common red flags (based on thousands of home inspections in the Valley) are as follows:
Even when an entire home has been remodeled, never assume the work was done correctly until it is inspected and the remodeled components tested (i.e., faucets, drains, kitchen appliances, etc.). A new built-in microwave without an electrical outlet to power the microwave, a new laundry room without a dryer duct installed, and a dishwasher drain line knockout that was not removed at the disposal (resulting in a dishwasher that will not drain) are examples of unnoticed items.
Homes built prior to the mid-1970s do not have electrical systems that meet modern standards. This can be problematic when a remodel creates additional electrical loads. Problems may include:
- Tripped circuit breakers due to higher electrical loads when a microwave, dishwasher, and disposal are added to a kitchen remodel. Installation of additional electrical circuits is required, however extra circuits are oftentimes not added.
- Incomplete “upgrades” of homes that utilize ungrounded 2-conductor electrical wiring. Remodelers often replace the 2-hole electrical outlets with 3-hole outlets but fail to upgrade the electrical wiring, which results in ungrounded outlets — a potential safety hazard.
- An outdated electrical panel incapable of handling the new electrical load — another potential hazard.
- Improper electrical wiring in the attic — a common defect and hazard.
An “open” floor plan is an attractive feature of a remodel, but making improper and unpermitted modifications to a roof or attic structure can occur. Any structural changes require a city permit, engineering analysis, and city inspections. Because permit review is not included in the home inspection scope of work, buyers should contact the city to ensure the appropriate permits were used.
A/C and heating systems are often neglected.
A fresh coat of paint will cover up previous or active leaks. Buyers should consult the Seller’s Property Disclosure Statement (SPDS) for any disclosures related to moisture penetration.
A “fix-and-flip” home is a great option. However, it is important to make sure there are no major red flags before a purchase. A professional home inspection can go a long way to troubleshoot problems and help buyers achieve peace of mind.