I owned an investment company once in my life that flipped up to 20 homes per month.
Obviously, we purchased many homes in every way possible to purchase them. The MLS, wholesalers, court house steps, directly from banks. We were the guys, if you had a house you could not sell that was just really, really bad off, call us, we would always buy it.
A great deal on the court house steps.
The bank was letting to let this one go and for a great deal. It was a 1900 sf home, two stories, about 35 years old in a working class area, right in my ballpark. It was always a gamble buying on the court house steps as you had seconds to make a choice on houses, it was 100% about the numbers.
SOLD! Sight unseen, like so many before.
We often purchased sight unseen, we purchased with our numbers. We bid based on the home being in the worse possible condition, we won this particular house and at a good deal.
"It's a grand-slam", I recall telling my business partner when I saw it.
The kitchen was remodeled, newer flooring, good paint, overall a good house. Our company had a policy for the area it was in, every house we bought (unless it already had one) we installed a new roof, new AC and new hot water heater. We were re-selling to working class people and we wanted to be sure it would last.
The call from the roofer I will never forget.
It seemed a city inspector was at the house ordering my roofer to stop the work. Why I asked my roofer, you need no permit to replace a roof, I think you need to come here was his only reply. Upon showing up I was met by two city building inspectors. They explained the home was condemned by the city. Illegal additions (very well constructed and matched the home) violated the set backs. You will need an architect to make drawings and a variance from the city council, which requires hiring a lawyer.
$20,000 later we tore down the addition.
We were not getting a variance and had spent $20,000 already, it was clear. We lost 600 square feet on that home which dropped the value by almost $75,000. A grand-slam had somehow been turned for double play.
Every investment has risks.
There was no record recorded by the city. While that did not get my $75,000 back, it did get the city attorney to have pity and drop the $10,000 in fines the previous owner had racked up. We were professionals, seasoned. We had been flipping for over two years at that point, more houses than I can count. It was just one of those bad things that can happen when investing and the outcome that gets left out on all those "flip" this house type shows.
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