Page 11 - From Ghetto to Gucci: The Basic Principles of Flipping Houses

So what are some good examples of cosmetic work? Paint is the classic, and most common
cosmetic item. Some other good examples are dead grass outside, and ugly appliances,
furniture/curtains, flooring, and kitchen counters. All of these can be replaced fairly easily, with
new turf, new appliances, staging, and updated kitchen counters. Flooring can often be updated
by tearing up old carpet to show the hardwood floor beneath and refinishing, or by installing new
carpeting, depending on the situation.

All of these are quick and easy fixes, which the buyer will most likely overestimate. Whenever a
buyer walks into a house that’s full of ugly old things, their reaction is completely different to a
house that’s been recently painted, has new carpeting, and is beautifully refinished. That
difference is where you, as a flipper, make your profit.
That same ideal extends to work done throughout the house. I’ve been able to make
tremendous profits by recognizing where you could do a lot split, and turn one house into two
couplets. I’ve been able to recognize foundation work that others estimated at $30,000 that I
could get done for $10,000. Finding value is something that can be found in any aspect of the
house, and it can be done in a very methodical way that ensures that you won’t overpay for
work that you do on a house.

Finding a House – Where to Look

Finding a house is easier said than done. If you’re in a major housing market like San Francisco
or Los Angeles, you’ll find that there are plenty of people looking, so that each potential house
can be bid up past the point at which you will make profit. If you’re in a less aggressive market
the competition will not be as fierce, but you’ll still find yourself competing with other investors
and some types of homebuyers. So how do you separate yourself from the scrum and find good
deals?

The resources that you’re going to use to find good deals are readily available to all your
competitors. However, what will make you able to find a good deal is consistent effort. It’s
consistently doing each of these things day after day that will allow you to snatch up the best
deal as soon as it appears.

Those resources that you’ll be primarily using are the MLS, your agent’s networks, and the
foreclosures from the counties you’re interested in purchasing in. There are others, which I’ll
cover other ways of finding houses that require more resources and commitment in another
chapter.

The MLS is your primary resource, and it’s the primary resource of every other real estate
agent. You’ll want to check every day on the MLS to see whether there’s a house listed that

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