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Finding Your Buying Criteria When Fixing & Flipping Houses

by Marty Boardman on May 17, 2012 · 10 comments

  
knowing what you want flipping houses

Some would say I’m boring. Predictable.

I order the same meal, everytime, at the Mexican restaurant down the street from my office. When I walk into the neighborhood sushi bar the waitress doesn’t even bother handing me a menu. She knows I’m having the Bento Box B. From microwave popcorn to breakfast cereal to restaurants – it’s always the same.

Why?

I know exactly what I want. And when I don’t get it I’m usually disappointed.

This is why buying a vehicle can be such a tedious experience. Have you ever walked into a car dealership and told the salesman exactly what you wanted? You explain the car must be silver with black leather interior, 2-door, convertible, good on gas and low on mileage. Before you know it, he’s showing you everything on the lot but what you just described to him 10 minutes ago.

I can make you a great deal on this minivan he proclaims. Or how about this jacked-up superduty crew cab pickup truck with gigantic offroad tires and tow wench?

It’s easy to say no because it’s not what you want right? Well, if you’re like me maybe it’s not that easy to say no, especially to a big truck.

Establishing Your Buying Criteria

Similarly, I also know exactly what I want when it comes to flipping houses. For starters, I’m not into advanced cosmetic repairs or major structural improvements. I prefer quick, easy-to-fix properties that require the basic stuff – carpet, paint, flooring, appliances, landscaping and minor mechanical repairs. The houses that require major renovations are generally more profitable but require more time and money to sell.

It’s up to you to decide. Do you want to do more light cosmetic rehab deals or fewer big renovation projects? You’ll also need to determine the following:

  1. Target property
  2. Target neighborhood
  3. Target price point
  4. Target rehab

Stick to your guns. Don’t be lured into buying a property that doesn’t match your buying criteria. Otherwise, you could end up with a lemon.

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{ 10 comments… read them below or add one }

Sharon Vornholt May 17, 2012 at 6:21 am

Marty – Some of the most successful investors I know won’t deviate from their formula. They know what works for them and they stay on that path.

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Marty Boardman May 17, 2012 at 10:33 am

Sharon, I bet they always order the same thing at Olive Garden too. Thanks for reading!

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Aaron Hoos May 17, 2012 at 11:40 am

Love the post, Marty! I’m huge into formulas (not just in real estate investing but in other kinds of ventures, too). Formulas are powerful ways to help you sleep at night while your investment is growing in value — they help you address risk, they build in profit, and they keep you focused on what you do well. More real estate investors would be successful if they spent time studying formulas, found one that worked for them, then applied it relentlessly.

PS, I always get the same thing at Olive Garden, too! haha

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Marty Boardman May 17, 2012 at 9:11 pm

Aaron, having a formula definitely helps me say no without hesitation. And yes to the lasagna and breadsticks at Olive Garden.

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Gidon May 17, 2012 at 7:16 pm

Marty,

I work in the field of residential new construction in Westchester County NY. As you pointed out there is more money to be made in this type of investment but you also need a lot more capital for each deal. In our area most homes are newly built on lots where the houses are torn down. The company I work for has been doing this type of work for almost 30 years and I think one of the keys to success is the demand and buying power of the people in the community. Of course delivering a high quality product, with a good layout, and in the right location is critical for the company’s overall success story.

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Marty Boardman May 17, 2012 at 9:14 pm

That’s big time stuff Gidon. I’ve heard Westchester county is an exclusive area. Don’t the Clintons live there? My in-laws live in Dutchess County. The property taxes alone in New York are a killer.

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McKellar Newsom May 17, 2012 at 8:35 pm

Great post, Marty!

I agree that it’s important to know what you want when buying. In order to keep me focused, I like to put my personal “buying criteria” in my notes section on my I-phone. That way, I can easily review my criteria. mck

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Marty Boardman May 17, 2012 at 9:13 pm

Good idea. I have written about my criteria on my blog and send it to wholesalers and Realtors so they know what I’m looking for.

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Leslie May 18, 2012 at 11:16 am

Great post. Since the DIY shows have come out. Everyone thinks they can thrive in this market. They don’t realize the capital and the time it takes to be successful.

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Gidon May 19, 2012 at 7:00 am

Hi Marty,

The way I look at Westchester County is it’s an established area with very few cookie cutter type communities. Only some areas have the huge mansion style homes but for the most part homes are modest. Home prices are very expensive in lower Westchester county such as in Scarsdale. A 3000 sf split level can easily be worth $1.5 mil on .25 acre.

Yes, the clintons own a home in Chappaqua, a very desirable community with great schools approximately one hour from NYC.

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