Page 16 - From Ghetto to Gucci: The Basic Principles of Flipping Houses

you spot peeling old paint and a lawn that looks taken care of, that usually means that the inside
is in good shape. If, on the other hand, you spot broken windows, damage to the outside the
house, or any more significant exterior damage, that usually means that the owner has applied
a similar level of care to the inside of the house.

You’ll want to move in closer, and look at the house where you can notice finer details. If there’s
wood siding, is it in good shape or is there dry rot? What’s the condition of the porch steps? If
there’s a fence, what’s its condition? Is the driveway going to need repaved? Knowing
beforehand if you’re going to have to replace any of these items allows you to add that cost to
the mental price of the house. The major item that you can look for as you’re also examining
these smaller items is the condition of the foundation. If the foundation is exposed, or if you’ve
got permission to go into the crawl space, you can look for significant cracks or defects in the
foundation. If you find any large cracks or damage to the foundation, that’s a red flag. You can
also look for other signs of potential cost or value, such as illegal square footage, large garages,
or huge yards.

Now it’s on to the neighborhood. What was it like? What are the houses on your block like? Are
they nicer or less nice than the surrounding neighborhood? Is there graffiti or trash readily
visible? Are the houses falling down or in good shape? Are there unfriendly-looking people
lingering in the street? Are there any cool restaurants, shopping or parks in the area? Who are
the people in the neighborhood, are they families with young children? Elderly? Young couples?
Singles?

Is it a mixed neighborhood, or is there only one dominant culture? Each of these questions will
bring you closer to understanding who is living in this neighborhood, and understanding why
they’re in this neighborhood. Each of these groups has extremely different tastes, so you will
have to customize the house according to the taste of whatever group is most likely to buy in the
neighborhood, which will factor into how much you will need to spend on the house to get your
highest value.

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