Bathroom Blues

Basement Before

Kitchen Before

Family Room Before

Foyer Before

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But not long ago news reports of mold-related illnesses and lawsuits against home builders scared the public into not even considering a house with any type of mold problem. With the housing market on the rise, rehabbers are finding mold is not as frightening as the media once made it. Many prospects in order to find an affordable home are looking at flipped houses. Mold is increasingly seen as a problem that can be solved rather than a hazard with new techniques and a better understanding of the dangers posed by mold. Heck, we didn’t even include it on our Houses Not to Buy list.

“For most people, a small amount of mold shouldn’t be considered a problem,” says Stephen Wilson, director of the Center for Indoor Air Research at Texas Tech University Health Sciences. However, since there are many different types of mold you need to make sure you know what you are dealing with. According to the Centers for Disease Control, small amounts of harmless mold appear naturally in all households, no matter how matter how often Mr. Clean visits.

Say a home inspection turns up evidence of Stachybotris chartarum, or stachy, a type of slimy, black mold that can cause allergic reactions in certain people. In many cases, small amounts of mold can be removed safely by the homeowner simply with a bucket of hot water and soap, while larger with larger outbreaks professional cleaning is a must. If the home is severely contaminated a complete gutting of a home may be required, which you will want to assess the cost of before deciding on flipping the house.  Keep in mind that the Centers for Disease Control recommends that it be removed no matter how much is found.

If the mold is left unchecked, it can trigger allergic reactions and asthma attacks for people sensitive to allergies, which is why it is mandatory to disclose mold on the house disclosure report. Typically, mold is discovered during the home inspection. If your building inspector can identify the moisture source, at that point it’s just like anything else that needs to be fixed before you can resell the house.

The real headaches occur when the source of the moisture isn’t obvious. If you cannot definitively decipher how the mold is getting there we would recommend passing on the home. It will just not be worth the headache. Last thing you want are your buyers to come back at your with a lawsuit.

There’s always going to be a market for the fixer-upper property, it may be mold, a bad furnace, structural problems or whatever. The problems that the buyers don’t want to deal with can mean potential on your end. Important thing is to b e able to asses with your Property Repair Estimate Sheet if the cost will be worth what you can get back on the deal.

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Backs up to apartment buildings-For one, being located next to an apartment building complex will bring your property value down. The point of rehabbing is to bring up the value of the property. Not to mention the possibility of noise, traffic and the caliber of renters the complex caters to (college students, low income, or young business professionals).

Like a good neighbor…

Secluded or too rural-It takes a certain buyer to want to live in an extremely rural or secluded area. Don’t pick a house that its nearest neighbor is a mile away. Most people like convenience and flippers will have an easier time selling a house that is near grocery stores, interstates etc. Plus you also want it to be easily accessible to you and your team of contractors.

Bad school district–If you have ever looked at an MLS listing then you know that there is a space for school district. Reason for this? People that have kids want their kids in a good school plain and simple. We can’t tell you how many families we have seen over the years pass on a house due to the bad reputation for the school. Do your homework and ask around, ask the neighbors or look up the school ratings. It could save you a potentially botched deal on a flip.

Can you hear the train coming?

Near Train Tracks-This is something you may not realize upon your first visit to the property but is worth checking with your realtor to see how often the tracks are used. They can definitely affect the value of the property. Loud train whistle at 2 a.m. Enough said.

Mixed use or commercial use- First problem is many people don’t realize that they will need a commercial loan to buy a mixed use property even if the majority of the income produced from it is the residential section of the property. Also you would need to keep a close watch on the strength of  your commercial tenants if you choose to rent to any. http://www.biggerpockets.com/renewsblog/2008/10/02/investing-in-mixed-use-commercial-property/

Bad lot- It is not to say that you should NEVER buy a house with a bad lot, but it will definitely make it harder to sell. Our team recently sold a property with a severely sloping back yard. We had to cut into the hill, add a retaining wall, and level the area at the end of the driveway to make it more usable. Problem solved in this situation but you will want to assess the cost vs. the return on an issue like this.

Got more to say on Houses Not to Buy? Send us your comments.

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Can you flip this house?

Fire-Damaged? Great! Structural Issue? No problem.  Mold?  Mmmm….Smells like money!  Most of the time, distressed properties and your run of the mill “ugly” or “dated” houses are hot pickings when flipping houses.  But there are properties out there that you should avoid at all costs.  Here are 8 properties that make our list of houses not to buy.

Size Matters

Can you add a half bath? Can you easily add square footage to make the house more appealing? Is there enough area to build up into the attic? Or how about finishing the basement instead? Oftentimes building up or finishing out an area will be more cost effective than changing the entire footprint.

Castles – While there is nothing wrong with flipping houses that are big, doing it in a subdivision where everything else is small is a problem.   Buyers are well-trained to avoid the biggest or most expensive house in the neighborhood.  Follow their lead and avoid these deals.

Planes, Trains, and Automobiles

Mass Transit – While the clack-clack of a cargo train passing a bedroom window is less disturbing than the roar of a 747 taking off, neither are particularly conducive to the image of peace and serenity you are trying to create for a buyer.

Overly convenient- If the driveway is connected to a road with “expressway” in the name, you need to avoid the property.  For that matter, any busy road should be a deal killer.  You don’t want potential buyers thinking about Pet Semetary while they survey your remodel.

 The Joneses

Messy neighbors – No one wants to move beside the person who stores car parts in the yard and appliances on the porch.  When you visit the home to complete your property repair estimate sheet, make sure you check out the neighbor’s homes as well.   No matter what’s growing in them, toilet planters in the front yard will not help your property value.

Yapping Dogs – Even hard-core PETA members would contemplate slipping a little something to the dog next door that barks from 2-6 am.  If the dog barks at you the whole time you are at the house, you can be sure he will do the same thing to your buyers.

Too Custom- A very custom house takes a very particular buyer. A home that is too different will mean less interest and make it harder to sell. You want to make the house you plan to flip and general and consistent as possible with a couple wow factors like stainless steel appliances in the kitchen or upgraded bathrooms.

Location, Location, Location

War Zones  – This should be obvious, but many a real estate investor has been tempted by ultra-cheap properties in questionable areas.  The ones who have answered the siren song often learn too late that the person who borrowed the air-conditioned and copper plumbing from the last owner is probably going to borrow theirs as well.  Quite simply, if you wouldn’t take a loved one to the house after dark, don’t buy it.

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