Investors are flipping houses like it's 2006 again.
This time it's not easy mortgages fueling the movement but fast-rising prices, hungry buyers, record profits and a panoply of home-flipping reality TV shows that make it look fun and easy.
Some flippers are turning historic homes into modern, hybrid treasures, but others are slapping cosmetic fixes on truly troubled properties, ignoring mechanical and structural issues. For more unsuspecting buyers, that move-in-ready dream home can quickly flip into a nightmare.
Cameron McGuire and his wife thought they'd be living the dream. The downsizing baby boomers moved out of their large suburban home three years ago and purchased a three-bedroom, three-bathroom condo in a historic Washington, D.C., row house. The home had been fully renovated and enlarged by a local developer-flipper.
"And that was actually part of the appeal — to have something that was completely finished that from top to bottom had been redone. All new electric. All new everything in it. High-end appliances. All of those things were part of the appeal for us," McGuire said.
For the first six months, everything was fine, but then they got a call from a D.C. housing inspector, who was investigating claims against the developer by other buyers. The inspector walked through the McGuire's home, and it was as if demons suddenly seeped out of the walls.
"They gave us list after list after list of things that were either not permitted or violations or weren't zoned correctly here in the property," said McGuire, pointing all around him. "Receptacles are not permitted the way that they're installed here. The canned lighting up in the ceiling is not permitted the way that it is supposed to be in here. Even looking at them I still can't even tell they're out of compliance. It was an unending list of things."
Worst of all, the developer never filed permits for the back addition, which houses two bedrooms and two bathrooms. The McGuires were shocked to learn that the city has the legal right to make them tear off the back of the house.