Don’t let the profit potential of a flip cloud your better judgement. A property that appears to be a financial homerun could wind up being a money pit if you’re not careful. Beware of these red flags that may mean you need to skip a flip.

A Substantial Price Drop

The house you’re currently considering was initially a little overpriced, and for that reason you passed it up. A modest price drop of a few thousand dollars helped renew your interest. No red flags there.

But when the price of a property is severely discounted, for instance by the tens of thousands, it may indicate that the seller is compensating for a significant defect that was discovered and is motivated to sell. This could be a good buying opportunity, or a red flag that you should look elsewhere. Always do your due diligence with a home inspection.

Areas of Fresh Paint

You’re a flipper, so you seek out distressed properties with outdated interiors. When you step into a home you expect to find stained and outdated carpet, peeling wallpaper, out of date light fixtures, and kitchens and baths in need of an update.

But…when you see sections of fresh paint throughout a house, that’s cause for concern. If there’s new paint only on certain walls in a room—and we’re not talking about accent walls, or fresh paint only on a portion of a ceiling, it could literally be a cover-up.

Perhaps the painted areas sustained water damage and were covered with paint to make them presentable. One thin coat of paint could cover an issue that sinks your budget. So examine freshly-painted patches very closely and compare what you see to the seller’s required disclosures about damage to the home.

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