Do Fix n Flippers usually buy property inspections before moving forward with a wholesale deal? I've heard mixed responses. If not, why not? And if so, what's the best way to accomplish this logistically? I have had some trouble scheduling between inspectors and wholesalers due to various factors such as contrained times to visit, houses still being occupied, fast closing times, etc. What are some general recommendations or tips? Thanks a lot in advance!
Joe,
Most flippers dont get full inspections on wholesale deals they move too fast. Good deals go quick, and wholesalers wont wait around. Plus, these properties are usually sold as-is, so an inspection wont change much.
What experienced Flippers Do Instead
Bring a Contractor Instead A 15-minute walkthrough with a good contractor will tell you what you need to know.
Know Your Numbers Upfront If you price in a repair buffer, minor surprises wont kill your deal.
Use the Inspection Period (If Allowed) Some wholesalers offer a short due diligence window use it wisely.
When an Inspection Makes Sense
If you’re new and not confident in spotting costly repairs.
If its a high-end deal or potential structural issue.
If your lender or partner requires it.
If you do need an inspection, find an inspector who moves fast and work directly with the wholesaler to coordinate access. But honestly? Most flippers skip the inspection, move fast, and trust their numbers.
Hope that helps whats your strategy right now?
-Tyler
Hi Joe,
I work with a lot of flippers and it just depends on how conservative you are. Some flippers I work with just gets a SOW from the contractors and some get inspection every single time.
Typically wholesalers won't allow inspection periods so you have to just trust the SOW or your contractor or your experience. If it's an easy cosmetic deal I wouldn't sweat over it too much as long as major items look good - plumbing, electrical, foundation, roof, HVAC, zoning, etc.
This is why for first timers it's a lot easier to go with on-market or off-market sourced with an agent than wholesalers. It takes a bit of experience and risk to be able to proceed without inspections.
If it's your first deal and especially on heavier rehabs, it makes a lot of sense to get inspection reports if you can. Better to lose $400 than buy a bad deal
Joe,
Most flippers dont get full inspections on wholesale deals they move too fast. Good deals go quick, and wholesalers wont wait around. Plus, these properties are usually sold as-is, so an inspection wont change much.
What experienced Flippers Do Instead
Bring a Contractor Instead A 15-minute walkthrough with a good contractor will tell you what you need to know.
Know Your Numbers Upfront If you price in a repair buffer, minor surprises wont kill your deal.
Use the Inspection Period (If Allowed) Some wholesalers offer a short due diligence window use it wisely.
When an Inspection Makes Sense
If you’re new and not confident in spotting costly repairs.
If its a high-end deal or potential structural issue.
If your lender or partner requires it.
If you do need an inspection, find an inspector who moves fast and work directly with the wholesaler to coordinate access. But honestly? Most flippers skip the inspection, move fast, and trust their numbers.
Hope that helps whats your strategy right now?
-Tyler
Thanks for the replies! So I am new and looking for my first deal, so I'm not too confident yet. I am partnered with a contractor who comes out to look at houses with me, so that does help. But he doesn't do everything, in particular plumbing, electrical, or termites/pests. I also have an investor putting some cash down who would prefer an inspection be done. So my inclination is to have inspections.
I'm just worried about something big and unforeseen going wrong, such as a pipe bursting underneath the house. Am I too concerned about this? If I can find a deal with a good enough spread, then perhaps that will alleviate the concern. If so, what is a good enough spread? I have read about the 70% rule, but not sure if that applies to cases where large unforeseen problems happen.
Throw any rule like the 70% rule out the window. You need to just fully underwrite each deal. After doing a handful you will get the hang of running numbers quick.
The poster @Tyler Hall outlined some good steps above. If you're saying your contractor doesn't do things like plumbing or electrical, then you should be doing a walk through with your contractor plus a plumber and an electrician.
There's only so much that can go wrong with these projects. Things will go wrong every time, so it's good to add in a 10%-20% contingency line on your budget that covers those unforeseen events. So for me if I'm budgeting $250,000 on a remodel (with a very detailed line item budget) then I'll add another $50,000 contingency to cover the unknowns. This amount is typically more than enough. It can cover something like a burst pipe as you mentioned, or it can cover misc upgrades that you decide to make that you weren't initially thinking about.
Typically good deals move too quick for a full inspection. However, I typically will not buy a property if I can not at least walk it first. Too many times pictures of the property do not tell the entire story - from foundation issues or rat infestation inside the walls, if a wholesaler will not at least let you walk it and wants to make the EM hard, those are red flags you can not ignore. I typically will pass on those deals.
Unforeseen issues always arise so @Scott E. is correct, always put a buffer of at least 20% on each deal for those problems that will pop up or more importantly, something that will come up on the buyers inspection that you will need to fix after you have your flip on the market.
It depends. If it's a wholesale deal or there's some competition, then usually not because time is of the essence (and often wholesalers provide inspection reports). If it was on the MLS or is in disrepair and no one else is bidding on the property (say an off market motivated seller) then yes sometimes. With big properties like apartments, usually they'll at least get specific inspections (i.e. roof, pest and dry rot, phase one, etc.)
But when a flipper becomes quite experienced they often feel comfortable enough doing the inspection themselves too, which is another factor. For new investors I would definitely lean toward getting an inspection if that doesn't kill the deal.
so if its a full gut probably not since starting from scratch any way . May make sense if you feel there are foundation or other structural issues though . If doing a light rehab depending on the scenario sometimes an inspection is good if planning for just a cosmetic not to have any surprises later in the project
It really depends. I know some do only to know what they're getting into. But if they're taking it down to the studs, it most likely wouldn't matter anyway. If spending a couple of hundred dollars will give you peace of mind, go ahead and do it. I am a local realtor who works with investors and I'd be happy to provide referrals. Feel free to reach out.