Some property investors make their money by buying older homes in good neighbourhoods and then renovating and ‘flipping’ the houses. This is a good business strategy for the property investor. It could also benefit the home buyer who can often get an upgraded and modernised home in a well-established, older area at a good price. Such homes are usually spacious by modern standards, with bigger rooms and large, well-established gardens.
However, John Graham, CEO of HouseCheck, says buyers and estate agents need to be cautious, because not all renovated homes are good quality. While some property flippers are seasoned investors who have established sound professional partnerships with architects, project managers, building contractors, project managers and specialist craftsmen, the lure of profits has also encouraged amateur property flippers to enter the market.
What should estate agents and buyers look out for when it comes to renovated properties?
Because the level of professionalism, experience, craftsmanship and attention to detail can vary greatly, buyers should be aware that there are some dodgy flippers who use cheap unqualified builders and inferior materials and designs, he says.
Don’t fall victim to a bad renovation. Make sure you ask the right questions; work with an agent and a home inspector who will help you spot red flags and advise you when it’s wise to walk away.
Graham shares a few helpful tips…
- Always make your offer to buy a flipped house contingent on a satisfactory home inspection. A qualified inspector will check the roof covering and structure, flashing, drainage, the waterproofing, the geyser, plumbing and electrical installations.
- A good home inspection will also report on the quality of workmanship. The inspector will use a moisture meter and a trained eye to look beyond the fresh coat of paint. Are the corners square? Are the floors even? The inspector will check the windows and doors to see if they’ve been replaced, and look at how they’ve been sealed. If any walls have been removed, the inspector will check out the plans and identify the load bearing walls. Safety aspects regarding balustrades and decks will also be inspected.
- Buyers should also check that there are approved plans for the alterations and additions.
- Find out who the building contractors were and, if possible, reference check their previous work.
- Also consider the overall design of the renovated home. Open the cupboard doors and drawers in the kitchen, bathrooms and bedrooms. Sometimes, what looks like a beautiful kitchen could turn out to be poorly designed. For example, you could find that the doors and drawers hit each other. If the appliances are not sold with the home, it’s a good practice to measure it to ensure that a standard size appliance will fit in the allocated space, and that you have the proper hookups to function in the designated space.
- Look at the quality of the materials which have been used in the renovation. There is a lot of cheap ‘grey market’ imported building material and fittings for sale on the South African market, and renovators and contractors may have been tempted to cut costs by using inferior non-SABS approved materials.
Of course, many renovated homes offered for sale by property flippers have been beautifully updated and are sold as ‘move-in-ready’. By being cautious and having the property checked by a competent home inspector, buyers can be rest assured that they have made a good investment, says Graham.
This article “Buying A Renovated Old House? Read This!” was issued by HouseCheck – http://www.housecheck.co.za/