Of all the things fix and flippers need to know, spotting potential electrical issues is a big one. After all, electrical problems can be both expensive and dangerous.
One of the reasons electrical problems can be so challenging is because they require expert installation and attention to building codes. They also require regular maintenance. Sometimes, inexperienced installers overlook important components. Additionally, in older buildings, the components may be old and in need of an upgrade.
Electrical issues can also lead to lawsuits for fix and flippers who overlook compliance and legal issues.
How can you avoid them? One of the best ways to handle electrical issues is to have the property vetted by trusted professionals. When you bring in a trusted licensed inspector and electrician, they can point out potential problems. They don’t have to be deal-breakers if you know about them and build them into your residential loan application.
6 Tips on Avoiding Electrical Issues
To maximize your profit on your next fix and flip, it’s important to have a full picture when preparing your rehab budget. Sure, you’ll walk through looking at the foundation, walls, and plumbing, but don’t overlook the potential for electricity problems.
That way, you won’t be in for nasty surprises later.
1- Go Pro
Like plumbing, electricity is not something to DIY. Rather, you want to rely on skilled professionals with years of experience. Not only are they skilled in the mechanics of electrical components and wiring, but they also know the building codes and regulations.
You don’t know what you don’t know, and that can prove both expensive and dangerous.
2- Avoid Surprises – Be Proactive
Every experienced fix and flipper remembers a painful lesson learned when they overlooked something or simply didn’t recognize the signs of something that turned out to be a big problem.
Here are five common signs of potential electrical issues.
When you turn on the lights, do they flicker? If so, that could be an indication of faulty wiring. You can do a quick test by replacing the bulb and seeing if it fixes the problem.
Safe electrical systems don’t sound like bees. If you hear a buzzing sound coming from outlets or sockets, it’s a good idea to turn off the power at the source and consult a professional.
Age of the Home – Check for Aluminum Wiring
A copper shortage in the mid-’60s led to electricians using aluminum for several years. However, it turns out that the connections are hazardous. In fact, the U.S. Consumer Product Safety Commission (CPSC) says homes built between 1965-1972 with aluminum wiring “are 55 times more likely to have one or more wire connections at outlets reach ‘Fire Hazard Conditions’ than homes wired with copper.”
If you picture rats, mice, and other rodents chewing through electrical wires, you can understand the problem. They usually choose hidden areas of the home to conduct their chewing – attics and basements are common. This can lead to fire damage because the chewing exposes the wires, which might rest on or near a bundle of insulation or even a wooden support beam.
How Old is the Property?
Older properties pose unique challenges to fix and flippers. After all, homes built 100 years ago (or more) often used different building techniques than newer construction. They also may have been retrofitted for electricity.
These houses require special knowledge of the building methods of the time.
When you have a qualified home inspector on your side, they’ll help you notice any potential problems in the property and make recommendations. It’s also a good idea to build a contingency fund into your rehab budget for any surprises. BMC can help you be a successful fix and flipper. Apply for a loan today.
About Bay Mountain Capital:
Bay Mountain Capital has been in business for more than a decade, closing approximately 2,000 loans. We specialize in financing all types of residential and commercial property investments throughout Texas and Georgia. Using common sense and value-added approach, we strive to incorporate these principles into our underwriting and closing processes.
As a direct lender, Bay Mountain Capital can close a loan within one day after receiving a complete file and clear title. The process generally takes two weeks for a residential loan but can be accelerated where circumstances require it.
We are primarily an asset-based lender, which means that qualification requirements are limited. Our rates and fees are among the lowest in the industry.