Jeff Fuentes Gleghorn
Investors have been snapping up single family homes in North Carolina to make a profit, either by renting out the home or by “flipping” it. House flipping is the practice of buying a home, remodeling it or making improvements, then reselling it at a higher price. House flippers typically own a house for less than a year. One of the problems with house flipping is that the owner wants to keep the remodeling costs as low as possible to make money, which sometimes means cutting corners in construction. It can be hard to tell if plumbing or electrical wiring was done poorly once the drywall is installed, but water leaks and electrical shorts can damage the home or even put lives in danger.
“We’re getting more complaints now about house flipping across the state and especially in the rural parts of the state,” Frank Wiesner, Executive Director of North Carolina’s Licensing Board for General Contractors, told WRAL News.
ATTOM Data reported that the average gross profit from flipping one house was nearly $69,000 this year, though that does not include the cost of remodels and repairs. While that is more than the average household income in North Carolina, it actually represents the lowest return on investment for house flipping in over a decade. The profit margins on house flipping are tighter than they have been since the aftermath of the 2008 housing crisis, which may explain why investors are trying to save money with shoddy construction.
WRAL News also spoke to Janet Thoren, Legal Counsel for the North Carolina Real Estate Commission. Thoren told them that “Right now, the large majority of our remodeling complaints are related to investors who are buying homes.” Thoren advised would-be home buyers never to waive the home inspection after making an offer.
People looking to buy a home can also check with their local inspections office to see if a remodeled house took out all the permits they should have, and see if an inspector signed off on the work that was done. Raleigh residents have access to an online portal to search for permit records on raleighnc.gov. Go to services, permits, then residential permits and open the portal. There you can search by address. People in other areas may need to call or email the inspections office to get the information they need.
Remember to be careful while looking to buy a home. Investors move fast because they do not have to worry about living in a poorly built house, but people looking to stay in a house long term cannot afford to skip an inspection. It is better to house hunt for longer rather than buy and end up with a home that poses a danger to you or your family.