I’ve looked at so many vacant homes over the years that I’m not really surprised by much anymore. So from my personal experience, here’s what to expect when looking at vacant properties.
Finding the right house to flip can be tricky – and sticky, smelly and/or hazardous. After a recent showing I was inspired to write this post about what to expect when looking at vacant properties, more specifically, bank owned properties. Because believe me, if you’ve bought a home the traditional way you’ve probably never come across some of the things you’ll see in a bank owned home. But why is this? – Because banks just don’t get it.
We’ve been actively looking at houses for a few weeks now knowing we’ll have our money in hand at the end of May from the sale of our first flip. And let me tell you, we have seen some gems this time around. Personally, my favorite houses to buy for flips are either bank owned, HUD owned, or estate owned.
So 99% of the houses we look at are vacant and have no one actively maintaining the condition (okay, I lied. Banks actually hire companies to take care of the homes but they rarely do anything more than a half assed job at it.) This also means that most of the houses we look at have dog shit on the carpets, writing all over the walls, stolen copper, tarps as roofs and human shit in all the winterized toilets and more unbelievable things like that.
A sign on the wall in one basement reads “This area was treated for SURFACE discoloration. It has not undergone sub-surface inspection. There is no guarantee of remediation. Buyer, Owner or Occupant is responsible for inspecting property prior to offer submittal or re-occupancy.”
The bottom line is this: banks are dumb (in my opinion). I imagine the conversation between people at the bank goes something like this….
“This guy is in default on his mortgage. Let’s take his house! Then we’ll turn off the power, even though it has a sump pump which needs said power, and we’ll let the basement flood. THEN — wait for it — we’ll let the house sit on the market for a few months or maybe even a year [insert evil laugh here] until the entire basement is black with mold and the upstairs is starting to mold as well. THEN, we’ll cut the price of the house in half, sell it to an investor and make back 25% of what was owed on the mortgage instead of making about 75% of what was owed if we just list the home at a reasonable price and not let it sit with the electric off. But that would make too much sense so yeah, let’s go with the let it mold plan.” – Said all banks ever.
They take back these houses from homeowners who couldn’t afford them in the first place– which most likely means they couldn’t afford the upkeep and regular maintenance on the home to begin with, so the home is already in disrepair. Then they compound the issues with the house when they let these houses sit empty with no power and therefore no way for a sump pump to run.
And the problems don’t stop with the sump pumps not being able to work. On my first flip the bank let the roof leak for so long the ceiling caved in! And while we’re not afraid of roof issues, it does scare a lot of other buyers away when they walk into a room and can basically
look up at the sky from the master bedroom.
And speaking of ceilings, you can sometimes expect it to be raining harder on the inside of a house than the outside. We went to look at a house during a heavy rain storm and we’re scrambling to get in this house, but when we open the door we realize there’s no where to take cover. EVERYTHING is leaking. But because we’re curious creatures, we still have to look. And I love when we do that because we find even more curious things.
Curious things like a hole blown through the foundation wall in the basement with a tilted lolly column holding up the home’s main support beam that they cut through in order to expand the basement. Or broken stairs that have no warning that you can’t use them – these are the houses that take forever to look through because you have to test each move you make to make sure the floor or stairs will support your weight.
The long and short of it is that finding the right house to flip can be difficult. Everyone has their list of things they stay away from and their list of things they want in a flip. For the next flip, we’ll be staying away from foundation problems, extreme mold and wet basements and we’ll be looking for a good layout, a home with character and one that’s nearby.
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