How Ugly is Ugly?

Question

I'm fairly new to wholesaling and I've come across a number of "distressed" properties.  The question I have is how do I make the "cut" on properties that are probably not worth doing the follow up?  For instance, I drive up to an "ugly" house that is obviously unoccuppied and not being maintained and requires somes repairs, how do I in a time effective way determine whether I should put this house on my list of potential wholesale properties or not?  So how Ugly is Ugly?
How do I determine rather quickly if the repairs/improvements are within a reasonable cost range relative to the value of the property?  I am thinking making this decision is very important before I spend the time to try and find the owners and go through the contract negotiation.  What do experienced wholesalers do about this situation?

Robert Burns · Answer

We just got some minor wind damage and lost power for 4 1/2 days.  My daughter lives in Houston and Ike went right over the top of her house.  Little damage and power loss fortunately.

Don Rathmell · Answer

You're not kidding.  You took the brunt of that storm up there in Tiger Town.

Robert Burns · Answer

Don,

Thanks for the response.  That's great information particularly in that we had a couple of hurricanes lately doing some significant property damage.

Don Rathmell · Answer

Ugly is not the issue in SOLA.  The issue is primarily structural integrity.  I would recommend that you don't base anything on the exterior appearance alone.  When you drive by, walk up to the house and take a look for potential deficiences - missing siding, a sagging roof, foundation/chain wall/visible pier and sill issues.  If it passes the initial test and you get inside to take a look, look for spongy or sagging floors, wall cracks, uneven floors, etc.  While this doesn't always mean things are beyond repair, it does give you an idea of what you may be looking at.  The next step is to get a structural engineer and termite inspector to take a further look.  They will be able to give you an idea on extent of the damage and estimated repair costs.  I use Gurtler Brothers for inspections.  The specialize in structural and foundation inspections in addition to the standard inspection.