Red Flag Flips: Signs That You May Need to Skip a Flip (Part 1)
While you’re in the flipping business to make money, profit potential shouldn’t be your only consideration when deciding whether or not to purchase a property. Beware of these red flags that may mean you need to skip a flip.
Lots of Homes for Sale in the Neighborhood
If there are lots of homes on the market in the neighborhood it could simply be happenstance, or it could be a red flag that a larger issue is at play. Perhaps land nearby is going to be purposed for something that homeowners don’t want to live near, like a commercial development, or a highway—which could mean an increase in traffic and noises like revving engines, horns, screeching tires, and sirens. Maybe a recently uncovered hazard, or other danger, is causing a flight from the neighborhood.
So do your homework, and ask your agent to help you identify any forthcoming projects or issues in the area.
A High Sales Turn Over
A home that’s been frequently sold could simply be a coincidence, or it could be indicative of a problem that previous owners didn’t become aware of until after they had already moved in. While it’s difficult to pinpoint why a previous owner decided to move, if you’re planning to purchase a hot-potato house it’s best to turn over as many stones as possible to see what you can find out before you make a move.
Your Neighbors
Good fences may make good neighbors, but fences can’t make the neighbors cut their grass, or quiet their constantly barking dog, or address the fallen shutters or peeling paint on their home. So, while you’re focused on the details of your potential flip, be sure to observe what’s going on in the neighborhood—because buyers will. While your flip house may offer an attractive profit margin, if issues in the neighborhood detract from its appeal and the enjoyment of potential buyers, you might want to pass on the opportunity.
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