North Bay Ontario as an investment market for flipped houses
Known as the “Gateway to the North,” North Bay Ontario is the perfect entry point for investors who are looking to establish or expand an investment portfolio in an area that offers exciting new opportunities in development and growth. North Bay Ontario was originally part of a canoe route used by Indigenous people and explorers. In 1882, the extension of the Canadian Central Railway into North Bay Ontario spurred settlement and growth in the area. Soon, the area attracted lumber, mining and railroad companies which helped ramp up development and draw new people to the area. Today, the city of North Bay Ontario has a population of 51,553 people and is home to various businesses, historical sites and other destinations. For investors, North Bay Ontario promises countless benefits and opportunities that help maximize profitability and minimize hurdles.
In addition to the industrial Real Estate Market North Bay, there are also a lot of exciting things happening in the commercial market in North Bay Ontario. North Bay has a large commercial sector with five distinct nodes, in addition to several smaller nodes throughout the area. The commercial landscape in North Bay is diverse and features everything from large chains to small independent businesses, giving shoppers access to a quality retail experience. North Bay businesses serve a regional market of about 112,000 people. Every year, the region attracts about 1.2 million visitors, which helps drive revenue and fuel growth in the commercial industry.
There are a variety of different houses for sale in North Bay, as well as investors who want to build their portfolio in the area. From modern homes to historic buildings and everything in between, there is something for everyone in the North Bay Real Estate Market. In recent years, demand for North Bay housing has grown steadily with approximately 1,665 units sold in 2020. That same year, the median North Bay home price was $270,400, which was a 26 percent increase from the year before. At the same time, the amount of time listings remained active before being sold decreased. In 2020, the amount of time a listing was expected to remain on the market before selling was just one month.
In today’s inventory-strapped real estate market North Bay, a flipped house can seem like a diamond in the rough: updated, located in an up and coming area, and 100% move-in ready. They’re often priced competitively, too.
As they say, though, you can’t judge a book by its cover — and sometimes, when it’s flip houses we’re talking about, that cover can be pretty misleading.
The value of a flipped house relies heavily on the skills of the seller. Did they choose the right location and projects? Did they hire trustworthy and experienced contractors? Did they cut any corners to save money or up their profit?
Here’s a full list of what you’ll want to do before buying a flip home:
- Do a very detailed walk-through.
- Check out the house flippers.
- Get the home’s history.
- Ask for a full list of all updates and work.
- Bring in a buyer agent’s expertise – especially when determining what to pay.
- Craft your purchase agreement accordingly.
- Check for permits on all upgrades and additions.
- Know what loan you’ll be using.
- Get the names of the contractors used.
- Go beyond the standard home inspection.
- Check for a certificate of occupancy.
- Ask about any warranties.
- Know the red flags.
Now, let’s go into each one of these items in more detail.
Do a very detailed walk-through
When you’re touring a flipped house, you’ll want to be as thorough as possible. Ask to check out the basement, attic, and crawl space, open up all the cabinets, and check that all the faucets, fixtures, and appliances work. You should also check the home’s paint job and little things like molding and baseboards. If these things look haphazard, you can probably guess the flipper wasn’t thorough elsewhere either.
Check out the house flippers
Not all house flippers are created equal, so try to learn what you can about the person who bought and flipped yours. A local real estate agent may be able to help you here, as they may have worked with the seller before or may know someone who has). If it’s a company or firm that did the flip, you may be able to look them up with the Better Business Bureau or find online reviews about them.
Finally, be sure to search their name/company name plus “lawsuit” or “legal claim” online. If a homeowner has sued them for poor practices, you might be able to find a record of it.
Get the home’s history
Do some digging into the property itself. Who were the previous owners? When was it built and by what builder? This information could be critical if you have an issue crop up months or years down the line. You should also ask about how long the home was vacant. Vacant homes are more likely to have damage due to frozen pipes, leaks, termites, and other issues that can go unnoticed.
Ask for a full list of all updates and work
Ask the seller or their agent for a detailed list of what was done to the property, as well as anything that was repaired due to previous defects. You should also ask for an updated seller disclosure statement, which should note any defects that the seller is aware of on the property in its current condition.
Bring in a buyer agent’s expertise – especially when determining what to pay
Having an agent on your side can be smart in any real estate transaction, but when buying a flip, it can be particularly helpful. Not only can they potentially provide insight on the house flippers, but they can also help you home in on the right purchase price to offer. They’ll take into account local comps and the state of the market and neighborhood as well as the value of the property and work with you to determine the right bid to make on the home.
Craft your purchase agreement accordingly
You have to be very careful when putting together a sales contract on a flipped property. For one, you need to include the right contingencies. Make sure there’s both an inspection contingency and an appraisal one (your lender will definitely want an appraisal), and consider a financing contingency, too.
You should also ask for a home warranty as part of your deal, and be smart about how much earnest money you put down, too. You don’t want to be out too much cash if you have to pull out unexpectedly, so talk to your agent about the right number to fall on here.
Check for permits on all upgrades and additions
Use the seller’s list of upgrades to double-check the property’s permits. If parts of the home are found to be out of code or unpermitted, it could mean serious penalties or you may have to repair — or even remove — part of your home as a result. It also means the upgrades probably weren’t done right — another huge red flag.
To check for permits, you’ll just need to contact the city. Find out what permits were applied for on the property, and make sure they were inspected and approved once finished, too.
Know what loan you’ll be using
Flipping houses isn’t looked at so kindly by mortgage lenders. In fact, if you’ll be using an FHA loan for your home purchase, you’ll need to tread especially lightly. The FHA has what’s called the 90-day flipping rule, and it won’t approve an FHA-backed loan on any property that was owned less than 90 days by the previous owner. If the home was only owned 91 to 180 days, you’ll also need a second appraisal before the FHA will insure your loan.
Most house flippers aren’t going to wait months for your FHA loan to come through, nor do they want to deal with multiple, time-consuming appraisals. Because of this, there’s a chance an FHA loan could hurt your deal, as sellers might prefer buyers with conventional loans or other types of financing.
Get the names of the contractors used
Though they’re not required to give this information to you, it’s smart to ask the seller what contractors, architects, and other pros they used in flipping the house. This allows you to check up on their licensing, experience, past work, and any pending legal action. You can also ask your agent for feedback on any local contractors used, as they may have heard about them through the grapevine as well.
Go beyond the standard home inspection
A home inspection is vital no matter what type of real estate transaction you’re going into, but when you’re buying a flipped house, you have to go above and beyond. That means you’ll want a termite inspection, a mold inspection, and maybe even a sewer inspection, if the house is older. The point here? Be thorough.
Check for a certificate of occupancy
Depending on your municipality and the work that was done to the house, a certificate of occupancy (CO) may be required before you can inhabit the property. This essentially says the home is up to code and passed official inspection. To determine whether a CO is necessary or has been issued, you’ll need to contact the planning or building department of your local municipality.
Ask about any warranties
You’ll definitely want to ask the seller for a home warranty as part of your negotiations, but you should also inquire about other warranties that may be in place, too — ones that came with new appliances or systems installed in the home or warranties on any contract work done as well. Make sure the warranties are transferable and that you have the contact info and other details necessary to call on those policies when needed.
Know the red flags
When buying flipped real estate, you need to be on high alert at all times, looking for red flags at every turn in the transaction. Is the seller cagey about giving out contractor info or showing you the list of repairs and upgrades? Did their LLC just launch 10 days before the property was purchased? Are they close-lipped about permits, COs, and other legally required processes? These could be signs the flipper isn’t trustworthy.
You should also look out for red flags physically – things like:
- Doors and windows that don’t open/shut properly.
- Signs of water damage on the ceiling or drywall or in cabinets.
- Faucets and fixtures that won’t get hot or cold or have poor water pressure.
- Attics and other less visible areas in poor repair.
- Uneven baseboards or paint lines.
- A water heater older than 10 years.
- Mismatched plumbing and pipes or rusted pipes.
These can all be indicative of either shoddy workmanship or larger
underlying problems — both of which could cost you in the long run.
Quick Tips To Look Out For When Viewing Flipped Homes
Flipped houses are often competitively priced and located in an area with a good real estate market
Flipped houses are usually move-in ready with upgraded appliances and repainted walls
Patience and good judgment are especially important when buying a flipped house.
Whether you’re looking to quickly relocate for a new job offer or you’re searching for a home with updated appliances and modern renovations, considering a flipped house might be for you
While the house might look all shiny and brand-new on the outside, it’s important to make sure the quality of the renovations meets the standards set by the city you live in.
Hire a home inspector to examine elements such as the HVAC system, drywall, electrical wiring and plumbing as they easily spot signs of shortcuts and other issues that the average person might not notice.
Be wary of words like custom and luxury. They are often misused, and the definition changes depending on to whom you’re speaking.
The bottom line
Buying a flipped house can be tempting, especially in an area short on listings. But don’t let a quick makeover fool you. Be thorough in evaluating any potential property and the people selling it, bring in some pros to help, and protect yourself with a smart contract, warranties, and thorough inspections.
At the end of the day, remember that real estate investors get into flipping houses for a profit. Take steps to safeguard your money as well.
Flipped Property can be fascinating but whether you should buy it or not depends upon your awareness. Hope you find this piece of information useful for your further decision making. Let us know in the comment section below.
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