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 Analyze a Real Estate Deal
Deal analysis is one of the best ways to learn real estate investing and it comes down to fundamental comfort in estimating expenses, rents, and cash flow. This guide will give you the knowledge you need to begin analyzing properties with confidence.
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:
- 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