Page 20 - From Ghetto to Gucci: The Basic Principles of Flipping Houses

that was priced too high, or losing money because they spent an extra $20,000 on a house that
didn’t need it.

Looking at Other Houses.

We’ve been over the basics of foreclosure investing, and now it’s time to take some of those
tricks that we learned in looking for foreclosures, and applying them to evaluating and
purchasing other properties. What you’re looking for from property to property stays the same,
what changes is the circumstances in which you can get it done.

When you’re buying a house from the MLS, or through escrow or more traditional means, you
have more time to examine the house and create a better and more accurate estimate of the
work involved. This allows you to come up with a more accurate estimate, as well as allowing
you more leeway to negotiate with the selling party.

When you first see a potential property, you’ll want to walk in there with a realtor. Your realtor
will be a fantastic resource on letting you know what sort of price you can expect to pay in this
condition. They will be able to guide you as you submit an offer that is acceptable to the owner.

As you go through the house on the first walkthrough, look for the same things that you looked
for in the foreclosure process. Is there any foundation damage? What is the condition like on the
inside? Will you have to replace toilets, showers, cabinets, vanities, or anything on the inside? Is
there a new roof or guttering needed? Will you need to replace anything inside or outside the
house due to dry rot? Look out for leaks, and any presence of water within the house itself.
That’s another big red flag.

Now that you’ve looked through the house, you might be able to come up with a quick estimate
of the work that needs to be done. This largely depends on your experience working with
contractors or remodeling homes, as many beginning flippers grossly underestimate the costs of
remodeling. If you’re an experienced flipper, you should be able to have a rough estimate of
price after one walkthrough of the house.

Fortunately, as a beginner there are ways to get around your lack of knowledge coming into the
flip. When you’re looking at the house, you can have a general contractor come with you, and
have him give you an estimate for all the work that you wish to do. This will give you a real,
market-value dollar amount for the work that you’re looking at that you can take or leave. It
doesn’t obligate you to anything either.

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