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Never Buy These Types of Houses, Says This Real Estate Pro

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5 months ago

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Buying a home is a significant financial investment. The last thing you need is for it to turn into a money pit after you’ve already taken out a mortgage and started living there.

Over the last two decades of my professional real estate career, I’ve compiled a list of red flags to avoid during your home shopping journey. Some are obvious budget drains based on the type of property, while others are problems hiding deep below the surface and might only be uncovered during a home inspection.

To save you the trouble of finding out the hard way, here are a few warning signs on the types of homes you should never buy.

Why home inspections are critical

First, let me explain why I always advise my clients to never skip home inspections. The current housing market is competitive, with high demand and low inventory, and many homebuyers skip inspections without realizing how that can lead to significant financial consequences.

You’ll save money in the long run by identifying potential issues early. Here’s what you should be looking for during a home inspection:

✔️ Structural issues: Cracks in the foundation, walls or ceilings can indicate serious structural problems.

✔️ Plumbing and electrical systems: Old or faulty systems can be hazardous and expensive to replace.

✔️ Roof condition: A worn-out roof can lead to leaks and water damage.

✔️ Water damage and mold: These can cause health issues and require costly remediation.

A next-door neighbor of one of my real estate clients recently bought a home. To be more competitive position and speed up the process, they had waived an inspection. After a few weeks of heavy rain, they discovered the previous owner had buckets in the attic to catch the rain from the leaky roof. The buckets had filled up and were overflowing into the ceiling, leading to thousands of dollars in unexpected repairs. The situation could have been easily avoided with a thorough home inspection.

7 types of houses you should never buy

In a recent YouTube video, I went over the types of properties you should avoid. Here’s a summary.

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1. Flipped houses

Many flipped houses are poorly refurbished by inexperienced investors looking to make a quick profit. They often cut corners on visible and hidden issues. If you can see obvious flaws, imagine the problems you can’t see. Always make sure that permits were pulled and work was done by licensed contractors.

2. Houses on hills or near major streets

Properties on hillsides without proper structural reinforcement can be prone to erosion and landslides. Houses near major streets, freeways or railroads suffer from noise issues, which can significantly reduce their resale value.

3. Houses with foundation issues

Structural problems, such as cracks in the foundation, can be costly to repair. Avoid homes with significant foundation issues since they can affect the entire structure.

4. Houses with old galvanized plumbing

Galvanized plumbing can rust and lead to water quality issues. Eventually, these pipes will need to be replaced, which can be expensive.

5. Houses with electrical issues

Old wiring, like knob and tube or aluminum wiring, poses fire hazards and can be costly to update. Buzzing panels or visible electrical issues should be a red flag.

6. Houses with mold

Mold can be a severe health hazard and difficult to remediate. Extensive mold problems often indicate underlying water damage that needs to be addressed.

7. Houses that need a new roof or have flat roofs

Replacing a roof can be expensive, especially if the entire roof is flat, which can lead to drainage issues. Flat roofs have a shorter lifespan and can lead to ongoing maintenance problems.

Always check on home insurance before you buy

Before buying a home, check if you can get home insurance based on its location. Some insurance companies deny coverage for homes in certain areas due to risks like floods or fires. Verify that all necessary permits were pulled for any renovations, and make sure there are warranties for significant appliances and systems. Never close on a home without doing a final walkthrough to confirm its condition.

Location, location, location

While the quality of a property is key when buying a home, location can’t be overstated: Even if you find the perfect home without any major issues, you can’t pick it up and move it to a more desirable place. Research the quality of local schools, safety and business investments in the area, which can significantly impact your home’s value as well as your quality of life. But also remember that neighborhoods can and do change over time.

Nothing is an absolute

There are always exceptions to the rule. Sometimes older houses can be better constructed than newer ones. Balancing location, affordability and the condition of the home is a challenge, but being diligent and informed will empower you to make the best decision.

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Unlock Reliable U.S. Real Estate Opportunities with Oak Street Partners

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1 day ago

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November 20, 2024

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OAK STREET PARTNERS UNLOCKING OPPORTUNITIES  FOR CANADIAN INVESTORS IN THE U.S. RENTAL HOUSING MARKET

Oak Street Partners is leading the way in cash-flow-focused U.S. affordable housing investments

TORONTO, ON | NOVEMBER 18, 2024 – With the Canadian real estate market facing challenges and declining opportunities for investors, Oak Street Partners, a Toronto-based private real estate investment firm, is offering a new avenue for Canadian investors to diversify into the U.S. rental housing market. Oak Street Partners enables investors to passively invest in U.S. affordable housing, providing them with stable, cash-flow-focused returns while helping meet the growing demand for quality, affordable housing in the United States.

“Market conditions in Canada have made it more difficult for investors to find reliable, income-generating opportunities,” says Parker Christie, Founder & CEO of Oak Street Partners. “By turning to the U.S. affordable housing market, we’ve been able to create consistent, cash-flowing investments that benefit both our investors and local communities.”

Building on this approach, Oak Street Partners facilitates investment by strategically acquiring and managing properties in the U.S., particularly in the Midwest and Southeast regions. Investors provide capital, while Oak Street handles all aspects of property ownership and management. Similar to a Real Estate Investment Trust (REIT), but privately structured, Oak Street ensures investors receive stable, cash-flow-driven returns without the need for direct involvement.
A key part of Oak Street’s approach is leveraging the Section 8 Housing Choice Voucher Program, America’s largest federal rental subsidy program that pays private landlords rent on behalf of low-income tenants. This guarantees a reliable, high cash flow income stream, even when real estate markets are challenged with high interest rate environments. By leveraging this program, Oak Street is not only able to provide consistent returns to its investors, but it also enhances lower-income communities, creating sustainable, quality homes for residents.

“It’s a win-win situation,” explains Trumbull Fisher, Director of Oak Street Partners. “Tenants are able to secure and enjoy quality, affordable housing, while investors benefit from reliable, government-backed rental payments that ensure steady cash flow.”

By investing in these properties, Oak Street is able to support the demand for affordable housing, while also contributing to the broader social good by addressing housing shortages and improving community infrastructure. This dual focus on financial return and social impact is what makes Oak Street’s approach stand out in today’s real estate investment landscape.

In its first year of operation, Oak Street has acquired over 100 units in Ohio. With $10 million in assets under management, the company has been able to offer its investors a 10 per cent cash dividend, which was distributed nine months into its operation. This is a rare milestone for companies in their first year, as many real estate investment firms operate at a loss in their early stages.

“As we look to the future, our goal is to expand Oak Street’s portfolio in high-demand areas across the Midwest and Southeast,” adds Christie. “Our focus will remain on sourcing properties that deliver strong, stable returns while positively impacting local communities.”

For more information on Oak Street Partners visit oakstreetgp.com/.

ABOUT OAK STREET PARTNERS

Oak Street Partners is a real estate investment firm focused on creating diversified and stable opportunities for investors in the U.S. rental housing market. We offer a unique pathway for investors to build and expand their portfolios by investing in affordable housing opportunities, improving the quality of life for tenants while delivering consistent returns for investors.

Website: https://oakstreetgp.com/

LinkedIn: https://www.linkedin.com/company/oak-street-partners-gp

Instagram: https://www.instagram.com/oakstreetgp/

Email: info@oakstreetgp.com  n

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‘The Bidding War’ taps into Toronto’s real estate anxiety

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1 week ago

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November 12, 2024

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‘The Bidding War’ is a play skewering Toronto’s real estate market via a story about a one-day bidding war over the city’s last affordable home. The cast and crew say it exposes how the housing crisis brings out “the worst in people.” (Nov. 12, 2024)

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Greater Toronto home sales jump in October after Bank of Canada rate cuts: board

Published

2 weeks ago

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November 6, 2024

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TORONTO – The Toronto Regional Real Estate Board says home sales in October surged as buyers continued moving off the sidelines amid lower interest rates.

The board said 6,658 homes changed hands last month in the Greater Toronto Area, up 44.4 per cent compared with 4,611 in the same month last year. Sales were up 14 per cent from September on a seasonally adjusted basis.

The average selling price was up 1.1 per cent compared with a year earlier at $1,135,215. The composite benchmark price, meant to represent the typical home, was down 3.3 per cent year-over-year.

“While we are still early in the Bank of Canada’s rate cutting cycle, it definitely does appear that an increasing number of buyers moved off the sidelines and back into the marketplace in October,” said TRREB president Jennifer Pearce in a news release.

“The positive affordability picture brought about by lower borrowing costs and relatively flat home prices prompted this improvement in market activity.”

The Bank of Canada has slashed its key interest rate four times since June, including a half-percentage point cut on Oct. 23. The rate now stands at 3.75 per cent, down from the high of five per cent that deterred many would-be buyers from the housing market.

New listings last month totalled 15,328, up 4.3 per cent from a year earlier.

In the City of Toronto, there were 2,509 sales last month, a 37.6 per cent jump from October 2023. Throughout the rest of the GTA, home sales rose 48.9 per cent to 4,149.

The sales uptick is encouraging, said Cameron Forbes, general manager and broker for Re/Max Realtron Realty Inc., who added the figures for October were stronger than he anticipated.

“I thought they’d be up for sure, but not necessarily that much,” said Forbes.

“Obviously, the 50 basis points was certainly a great move in the right direction. I just thought it would take more to get things going.”

He said it shows confidence in the market is returning faster than expected, especially among existing homeowners looking for a new property.

“The average consumer who’s employed and may have been able to get some increases in their wages over the last little bit to make up some ground with inflation, I think they’re confident, so they’re looking in the market.

“The conditions are nice because you’ve got a little more time, you’ve got more choice, you’ve got fewer other buyers to compete against.”

All property types saw more sales in October compared with a year ago throughout the GTA.

Townhouses led the surge with 56.8 per cent more sales, followed by detached homes at 46.6 per cent and semi-detached homes at 44 per cent. There were 33.4 per cent more condos that changed hands year-over-year.

“Market conditions did tighten in October, but there is still a lot of inventory and therefore choice for homebuyers,” said TRREB chief market analyst Jason Mercer.

“This choice will keep home price growth moderate over the next few months. However, as inventory is absorbed and home construction continues to lag population growth, selling price growth will accelerate, likely as we move through the spring of 2025.”

This report by The Canadian Press was first published Nov. 6, 2024.

The Canadian Press. All rights reserved.

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