Flipping a house with TERMITES!???

Question

Hello! I'm looking to flip my second home and already have eyes on a property I like. However, I have been informed by the listing agent that the original contract fell through because the WDI inspector found termites.... The home has since been treated and comes with a one year warranty. The home sits on a concrete slab and the attic was damage free. However, how can we truly know what the extent of the termite damage is?

Has anyone else had experience flipping a home with previous termite damage? How did it affect your ARV? I will have to disclose this now to the next owner. The numbers look solid but I'm a little worried I will be left pissing in the wind when it comes time to sell the house. Any help is much appreciated!

Thanks,

Art

Aaron K. · Answer

It partially depends on where the house is and the local perception of termites, in Southern CA for example it is basically a given that every house has termites it is just a question of how many and how much damage they've done.  If you have termite clearance you should be okay to sell, the only issue you'll face is perception.

Arthur Crum · Answer

I actually ended up being outbid by another investor on the aforementioned property. That said, I did learn a thing or two about termites! Basically, turns out my first flip (which I was working on at the time of the original post), in a strange turn of events, tested positive for termites (yes, it came back negative on the WDI inspection I had done)! In hindsight, it was a bit of a bogus WDI inspection but the fix was actually pretty easy. I ended up having to treat the home for termites which only cost me about $400 bucks give or take and that was that.

IMO, termites aren't that big of a deal depending on the extent of the damage, of course. Treatment usually comes with a one year warranty and costs a few hundred bucks. Knowing what I do now, I don't think termites would ever be a deal breaker. At least not where I live. It really boils down to having the right paperwork. You can't exactly tear a house down or apart to find every 2x4 that may have been chewed on. All you can do is do your due diligence. If the house checks out structurally, termites may be an easier fix than most investors lead on.

Varun Talluri · Answer

@Arthur Crum did you end up doing the flip? Would like to know your experience on this one