Five Ways to Spot a Home Flip Money Pit
(NEW YORK) -- Just a few weeks after Eric Mann bought a Brooklyn brownstone for $1.2 million in February -- and painted the walls, sanded the floors, and added a $300 chandelier -- he sold it for $2.1 million.
"I was extremely lucky," said Mann, who said he'd bought about 40 properties across Brooklyn over the years as a real estate investor.
That's the wild world of house flipping, which is up 16% since last year and 114% from the previous year, according to real estate data-supplier RealtyTrac.
Ericka Doolittle said thought she was getting the deal of a lifetime as well when she purchased a newly renovated home in Oakland, California.
"On the surface, it looked pretty good," she told ABC News.
Then she discovered something her inspector had cautioned her about: more than $15,000 in hidden costs, from loose wires to sewer leaks.
A year after buying, Doolittle found two feet of water under debris in the basement.
"There was a veritable lake," she said. "[And] a lot of flooding issues. There was water under the house."
"What flippers are particularly good at is to make surface repairs -- and not handling the structural repairs that are sometimes needed," said New York real estate guru Barbara Corcoran who appears on ABC's Shark Tank.
Jennifer and Steve Clark of The Home Co., a husband-and-wife team of flippers, shared the following insider secrets to spotting a potentially bad flip:
1. In the utility rooms, make sure the dryer and heater are vented out of the house.
2. Measure the height of the electrical sockets. Steve Clark said they should be about 12 inches off the floor — anything else could be a sign of old electrical wiring.
3. Switches should be on the wall, not set into the molding.
4. If the owner says the house comes with new appliances, ask to see the manuals.
5. In the bathrooms, separate hot and cold knobs in the shower may mean old fixtures were replaced but not the old plumbing.
The Clarks advised to always get a thorough inspection before buying and remember that if it sounds too good to be true, it probably is.
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