Follow Us on Social Media

email icon rss icon linked.in icon google plus icon twitter icon facebook icon

How to Flip Houses Like “Pig-pen”

by Michael LaCava on January 6, 2013 · 15 comments

  
Flipping Dirty

When I was a kid, I loved to play in the dirt.

I would wake up every day and yell to my mom “outside” and she’d swing open the back door and out I would run – making a beeline straight for the sandbox, dirt pile or closest mud puddle left over from the rain storm the night before.

I loved getting dirty so much that my favorite cartoon character on TV was Pig-pen from Peanuts. As you may recall, “Pig-Pen” is known for his filthy overalls and the cloud of dirt and dust that follows him wherever he goes. When he takes a deep breath (to sing, for example), the dust rises briefly around him. I loved Pig-pen. Its like we were long lost brothers…

I loved getting dirty back then…and I still do today.

Today though, when I get dirty, I have other things in mind, namely making money. However much fun splashing mud all over my Sunday shoes was way back when or dirtying up Grandma’s sweater from Christmas, making money is way more fun. And it all starts with getting dirty just like Pig-pen.

How to Flip Houses Getting Dirty

Maybe you’ve wanted to get into house flipping for quite a while now.

Perhaps you’ve tried in the past but lost money or just barely broke even. Or maybe you just don’t have a clue how to find good houses to flip. Maybe you just can’t find the money to get into your first house flip. Whatever your situation is as to why you didn’t do it in 2012, 2013 represents a blank slate for you.

So forget all the excuses, forget all the reasons why you couldn’t do it last year because now is the time to get into flipping houses. As overused and trite as the expression “there’s no better time to get in the house flipping” may sound…it is actually true!

If you are looking to find your first house to flip in 2013, and do it once and for all, then it’s time to get dirty. Because the first step to learning how to flip houses is research – and when you do it, you have to get a little dirty in the process.

The Dirty Way to Research Houses to Flip

No doubt, in-depth and exhaustive research is critical when it comes to finding that first house to flip.  Research is a funny thing because this is the step where I find a lot of people get stuck. All they ever do is research – and then they never actually take action on any of the research they’ve uncovered.

However, just by being aware of this trap sometimes is the key to doing it correctly. You don’t want to get hung up forever on the research step, but you do want to make sure you cover all your bases and know exactly what you’re getting yourself into.

Real research when trying to find houses to flip is essential. But I’m not talking about simply Googling your town and wasting hours of time surfing the Internet.  Although Internet research is a good place to start to find a good house to flip, it’s just that: a start. True, websites like trulia.com, movoto.com and realtor.com will give you a good idea of the lay the land, but don’t stop there.

If you’re serious about getting into flipping houses, the real research happens “in the field” getting dirty like Pig-pen.

Get Out…Get “Dirty”

When you’re researching houses to flip, you have to get a little dirty. If you’re not the “dirty” type, then just getting out there will suffice. When I look at houses to flip, I have no qualms about crawling into crawlspaces, poking my head into attics, sticking my head into rancid closets that were retired pot greenhouses and navigating down scary stairwells that have formerly been crack dens. You have to get out there, get dirty and physically visit your targeted geographic area in order to do real research.

True, “virtual tours” of properties is nice and safe and clean, but that’s not how you find the real deals. By “getting dirty”, it sometimes just means talking face-to-face with real estate agents instead of just e-mailing them are calling them as well.  If you do all your research from the safe confines of your keyboard, I guarantee that you’ll never really know what your market is all about.

“Dirty” House Flip Example

Let me give you an example of what I mean.

This past summer, I flipped a house that was located in a notoriously “tough” sub-section of a Massachusetts town.  This small area of town has multiple run-down homes and has somewhat of a “seedy” element. Additionally, it’s very depressed economically. In many sections of this neighborhood, there are police officers stationed at the street corners to keep an eye on the crowds and keep the peace.

I found this property on the Internet, surprisingly. I knew the neighborhood fairly well and I knew it had a real tough reputation. If I stayed “behind the desk” and never gone out and physically seen the property, I would’ve written it off and moved on to another house.

And who could have blamed me? I mean, who is going to want to buy a house in a neighborhood that is patrolled on foot 24/7 by police officers?

Suffice to say, I didn’t know that there were some streets in this neighborhood that were better than others. Some, in fact had views of the ocean. The listing online didn’t reveal any of this information.

When I visited this neighborhood, sure enough I found the police officers, but I also discovered that one of the streets I had never been on before had absolutely spectacular water views.  The difference from one street to the next in this neighborhood was enormous.  Because of the water views and proximity to a small beach, the home values on this one particular street were appreciably higher than the surrounding real estate…but the listing price did not reflect it.

I knew I had found a real diamond in the rough.

Search Neighborhoods and Streets

I ended up buying the house, rehabbing it and selling it for a very nice profit. In fact, I wrote about this one here on BiggerPockets a few weeks ago.

I’ll guarantee you this though: I never would have spotted the opportunity had I not physically drove out, visited it and gotten dirty like my buddy Pig-pen. Even if this house wasn’t a perfect buy, I had found a section of an individual street within a town, within a village, within a neighborhood that I could then target for future house flips. See how that works?

When you are looking for house flips to buy, you can break geographies down to:

  • Town
  • Village
  • Neighborhood
  • Individual street
  • Sub-section of a street

In other cases, by visiting one house, you come upon a street or an area of the neighborhood that is extremely undervalued. I could’ve gone to any of the other houses on this street and physically walked up to the owners and made offers on their properties as well. Or, I could’ve identified other houses for sale on the same street, perhaps ones that I had missed him my Internet search. The possibilities are endless.

It all starts with “getting dirty” like Pig-pen. If you don’t, you lose out. If you don’t mind getting dirty, then you’ll find house flips and properties 99% of the rest of the real estate investing world will miss…but you won’t.

Pig-pen would have made a great real estate investor though, don’t you think?

If you made it this far, please leave me a comment below! I’d love to hear about what you think about getting dirty, Pig-pen, your favorite cartoon character or anything else related to flipping houses or investing in real estate!

Photo: Loren Javier

Email *
  



{ 15 comments… read them below or add one }

Alison January 6, 2013 at 11:18 am

Hi Mike, love your topic and I agree with you 100%.

When I was first learning the business in 2008 I would look at every house possible for experience evaluating houses and talking to prospective sellers. My coach was very put out with me for taking that approach, saying that it was a waste of time but I knew that was what would work best for me, and it still does.

I said the same thing in my information technology career that I say in real estate – there’s no substitute for looking at the data!

Reply

Michael January 7, 2013 at 12:36 pm

Hi Alison,
I agree with you and don’t think it is ever a waste of time trying to improve your ability to perfect your craft. The fact you have a coach hopefully was to assist you to speed up the process and get you making smart investment’s based on his or her experience and knowledge. Data is great & #’s don’t lie! Love to hear about any deal’s you have done or are working on.

Reply

Brandon Turner January 6, 2013 at 1:12 pm

Great post Mike! I think a lot of times people see the guys on TV in the Armani shirts driving the Hummers and never getting any dirt under their fingernails and think that is what flipping is all about. It’s not of course, and even if you plan on hiring the work out, there are still going to be times to get dirty. Great post, thanks!

Reply

Michael January 7, 2013 at 1:21 pm

So true Brandon –

People get caught up in that & it sure does sell. I have purchased some of those programs so I can speak from experience! It’s not all glitz and glamour as they make it seem.
I have to laugh because as my company grows and I don’t get to know every subcontractor working my properties there are times when I just show up nicely dressed in business attire & may get into a conversation with one of the subs telling why something has to be done like a “short cut” as if I don’t know. A few minutes later they realize. LOL!

Reply

Jim January 6, 2013 at 1:57 pm

you can buy or sell a house from a desk.

Reply

Michael January 7, 2013 at 1:36 pm

Hi Jim,
I don’t believe I said you can’t . Maybe this is the quote you are referring to.
“If you do all your research from the safe confines of your keyboard, I guarantee that you’ll never really know what your market is all about.”
You can do both as suggested by your comment but to broad of a statement to get into it especially the buy side. Thanks for you comment & would love to here if you are using this strategy for buying without visiting the property and then selling. Not on a wholesale level but as an investor/rehabber.

Reply

lisa January 6, 2013 at 2:10 pm

Same scenario, but put in Baltimore instead of Massachusettes. I am a huge advocate of this, and its definitely my business models. The same attitudes about this “tough” sounding neighborhood in baltimore net me a successfully rented property at $975/month, that I purchased and repaired for 40k. You can’t beat that. Whenever someone asks about low income housing, is it worth it in a “war zone.,” i think, GO AND LOOK! See for yourself. Don’t let fear hold you back from a great deal. If you’re that worried, go during the daytime with a friend, conceal carry, and a fast get away car ;-) makes things a little more exciting, and a better story to tell anyways.

Reply

Michael January 7, 2013 at 1:40 pm

Wow! Great cash flow Lisa. That is awesome. Tough to do those around my area.
Typical single family all in for $125-135,000 will get you around $16-1800 month rent . Good #’s but I am now buying in other’s states because cash flow is much better like the one you have.

Thanks & be safe

Reply

Jose Gonzalez January 7, 2013 at 7:37 am

Hi Mike
Its good to hear advice from people that make flips all the time. As for me, I want to build a big long term portfolio with a good cash flow. I always see the opportunity of house flips but still, I look at the rental numbers and when I see that in 5 to 6 years the house would be payed off totally… I then prefer the long term cashflow.
In the example you mentioned, what would happen if you leased the house for a good amount and payed off the house with the rent in less years and then get the free money on the investment? or you always prefer to cash the profits and look for the next deal?
I have to say that my backround is what puts me into the long term investor since the money for the buys comes from a business I own.. It is never a bad thing to cash the profits from some deals for what I think… what do you recomend me to do since the market I am in it is getting harder to have good deals these days?
I enjoyed your article, thank you!

Reply

Michael January 7, 2013 at 1:45 pm

Hi Jose –

In this particular house selling was the best option. I buy and hold as much as I can as well because I am creating long term wealth by creating cash flow to live off of.
Sometimes you have to pay a little more for cash flow properties if your market is heating up
but don’t get emotionally involved on buying anything. Let the #’s do the talking and if you are buying properties that can be paid off in 5 years like you mentioned then that is fantastic and I would continue with that. You only need to flip if you need the cash.

Reply

Terry January 7, 2013 at 3:21 pm

Great post Mike, I always liked Linus myself :-)

Reply

Michael January 7, 2013 at 3:55 pm

Thanks Terry! I Appreciate you following along.

Reply

Shaun January 17, 2013 at 6:59 am

Good article.
I usually say new investors make 1 of 2 mistakes.
1) They don’t look at enough houses.
2) They look at to many houses.
:)

I’m at the point where I actually get mad if I take the time to go to a house and don’t buy it.
Do a lot of desktop analysis and make safe offers.
I go look when I see a counter offer in the possible range.
I do have Realtors to preview them sometimes and will look at the good ones.

Good stuff Mike!

Reply

Michael January 17, 2013 at 7:13 am

Thanks Shaun – So true and sometimes you have to find your own style that works for you and gets the business at hand done. Thanks for your comments and keep them coming!
Out in PA this week diversifying my portfolio holdings. Great market here!

Reply

Shaun January 17, 2013 at 9:33 am

LOL me too.
Sitting in PIT baggage claim with Linda right now.
:)

Reply

Leave a Comment

Comment Policy:

• Use your real name and only your name in the field designated for your name.
• No keywords allowed as anchor text in the name or comment fields.
• No signature links allowed under your comments
• You may use links in the body of your comment, but it must be relevant to the discussion at hand, and not merely be some promotional link.
• We will have NO reservations about deleting your content if we feel you are posting merely to get a link without adding value to our discussion.
If you add value, but still post keywords, we'll use your comment, but remove your link and keywords.
• For more information about acceptable practice, see our site rules.

Want your photo to appear next to your comments? Set up your Gravatar today.

Previous post:

Next post: