Flip Gone Wrong

Investor · Get yourself trained before doing something inadvisable. · Member since 2024 · 3k+ posts · 1k+ votes

2mo

I had a property I was flipped upstate NY. It looked amazing on paper, but the struggle of finding reliable contractors in the area was a killer. I had to pay extra to have my usual guys from Long Island go a few hours away and stay at this house. It hurt my bottom line a little but it was still shaping up to be a nice deal. I ended up posting the listing and apparently some of the things done by the previous owner was never permitted as the lower level of this hi-ranch was finished. Apparently that was never approved and the town hit me with a ton of violations to get this up to code I had to pull permits and if anyone has worked in NY before you know this process is extremely slow. While this process was playing out I also unknowingly had a leak in my water main underground in the front yard. I live nowhere near this property so I wasnt checking on it and I had the house winterized for the winter and the main shut off in the garage. The water company contacted me a feww months after we finished while I was waiting for the permit issue to be resolved and told me I needed to pay the bill that I owed the 7000 DOLLARS!!! I obviously went nuts lol. Why wouldn't they call me sooner?! I ended up having to pay like 10k to have the front yard Dug up and the leak fixed, and negotiated the water company down to half. All together I was luckily able to almost breakeven minus my sanity lol. But yea definitely was a stressful year with this one on the books that I initially thought would be a homer.

Sorry man, I hate that when it happens.

That's why I always teach my investors to live within an easy drive of their investment. Things come up.

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Tyler MccleanPro Member
OP
Investor · Nassau County, NY · Member since 2022 · 64 posts · 17 votes
2mo
@Ken M. You live and you learn
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Jules Aton

MD/DC · Member since 2024 · 1k+ posts · 1k+ votes

2mo

Thanks for sharing. Ugh just ugh.

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Denise SuppleeBusiness Member

Realtor · Willow Grove, PA · Member since 2017 · 955 posts · 635 votes

2mo

Oof, what a year! It's crazy how one deal can test everything; I'm glad you made it through.

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Robert EllisBusiness Member

Developer · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes

2mo

Quote from @Tyler Mcclean:

I had a property I was flipped upstate NY. It looked amazing on paper, but the struggle of finding reliable contractors in the area was a killer. I had to pay extra to have my usual guys from Long Island go a few hours away and stay at this house. It hurt my bottom line a little but it was still shaping up to be a nice deal. I ended up posting the listing and apparently some of the things done by the previous owner was never permitted as the lower level of this hi-ranch was finished. Apparently that was never approved and the town hit me with a ton of violations to get this up to code I had to pull permits and if anyone has worked in NY before you know this process is extremely slow. While this process was playing out I also unknowingly had a leak in my water main underground in the front yard. I live nowhere near this property so I wasnt checking on it and I had the house winterized for the winter and the main shut off in the garage. The water company contacted me a feww months after we finished while I was waiting for the permit issue to be resolved and told me I needed to pay the bill that I owed the 7000 DOLLARS!!! I obviously went nuts lol. Why wouldn't they call me sooner?! I ended up having to pay like 10k to have the front yard Dug up and the leak fixed, and negotiated the water company down to half. All together I was luckily able to almost breakeven minus my sanity lol. But yea definitely was a stressful year with this one on the books that I initially thought would be a homer.

The part that jumped out at me wasn't the contractors or even the water main.

It was the finished lower level that was never approved.

I've seen deals where the rehab budget was accurate, the ARV was accurate, and the timeline was reasonable. Then one permit issue surfaced and suddenly everything else got put on hold while carrying costs kept running in the background.

That's what makes these situations so frustrating. The thing that hurts the deal is often the thing nobody underwrote because nobody knew it existed.

The fact that you almost broke even after a year of permit delays, violations, a $7,000 water bill, and a $10,000 repair bill is honestly impressive.

Looking back, was there a point where you considered cutting your losses and selling before the permit process played out?

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Tyler MccleanPro Member

OP

Investor · Nassau County, NY · Member since 2022 · 64 posts · 17 votes

2mo

Wasn't possible I was in contract with someone who wanted the violations cleared and just rode out out the storm

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Stuart UdisPro Member

Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes

2mo

@Tyler Mcclean Thanks for sharing. There are a lot of valuable lessons in your experience, particularly regarding the importance of thorough due diligence.

One of the challenges with investing across multiple markets is that every municipality has its own zoning requirements, permitting processes, inspection standards, and enforcement practices. What works in one jurisdiction may create significant problems in another, which makes local knowledge and research critical.

The other point that stood out to me was the issue surrounding permits. In my view, underwriting should assume that all work will be completed in compliance with local permitting and inspection requirements. Too many investors build their budgets around best-case assumptions and treat permits as optional or something that can be addressed later.

I regularly see investors attempt to save time or money by completing work without the required permits, only to be hit with stop-work orders, delays, additional engineering requirements, or costly corrective work. What initially looked like savings often ends up costing far more than simply following the process from the beginning. Permits and inspections should always be viewed as part of the project cost when underwriting real estate acquisitions.

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J CastroBusiness Member

Lender · Florida · Member since 2025 · 633 posts · 237 votes

2mo

That’s a brutal reminder that even the best-looking deals can turn into expensive lessons. The contractor challenges alone can eat into profits, but the permit issues and water main leak were the kind of hidden risks that are almost impossible to underwrite upfront.

One takeaway for newer investors is the importance of doing as much due diligence as possible on permits, code compliance, and utility history before closing—especially when investing remotely. Unfortunately, some surprises only show up after you own the property.

The fact that you were able to negotiate the water bill down, get the violations addressed, and ultimately come close to breaking even says a lot about your persistence. Many investors would have walked away from a project with that many setbacks.

Thanks for sharing the story. It’s a great example of how real estate investing isn’t just about finding deals—it’s about managing problems when they inevitably show up.

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Tabish MasoodPro Member

Investor · Sterling, VA · Member since 2026 · 89 posts · 48 votes

2mo

This is a great example of why experienced investors spend so much time on due diligence beyond just the financials.

A lot of us analyze ARV, rehab budgets, holding costs, and expected profit, but issues like unpermitted work, municipal compliance, utility infrastructure, and contractor availability can completely change the economics of a deal.

One lesson I took away from your story is that remote investing often introduces risks that aren’t obvious on the spreadsheet. A deal can look fantastic on paper, but if reliable contractors are scarce, permit offices are backlogged, or you’re unable to regularly inspect the property, the execution risk increases significantly.

The water main issue is especially painful because it’s one of those low-probability events that almost nobody budgets for, yet when it happens it can wipe out a large portion of the expected profit.

The positive takeaway is that you managed through multiple major setbacks, negotiated with the utility company, solved the permit issues, and ultimately avoided a significant loss. That's the kind of experience that doesn't show up in ROI calculations but can make you a much better investor on future projects.

Stories like this are valuable because they remind newer investors that real estate returns aren’t generated solely by finding good deals—they’re generated by successfully navigating problems after the acquisition.

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David KaufmanPro Member

Member since 2019 · 4 posts · 3 votes

2mo

I'm just starting out, but I keep hearing experienced investors say, "Scope the water main during due diligence!" I guess they learned the hard way (like you just did). Would that have caught your leak?

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