After being covered in fleas last week while viewing a vacant house, I decided to write this article on some things that you should seriously consider bringing with you when you go to view a property.
First, have you joined our private FlippingJunkie facebook group? Come network with us!
This is a must have as the days get warmer and you are going to look at a vacant property. Being covered in fleas stinks, especially when you don’t realize they are hitching a ride on you until you are in car driving away.
If you haven’t been in many fixer uppers, you might not have thought of this. When I run out, I am usually headed straight to a cornerstore to get more. After going through houses that look like they’ve never, ever been cleaned, and you have to touch doorknobs, light switches and cabinet handles, you will be cringing as you feel the greasy, dirtiness.
Many of these houses do not have electricity. A mag lite flashlight was what I used to use, but I got sick of having to buy new batteries. They are good safety as well as you could hit an attacker over the head with it if you needed to. I use an 18v rechargeable DeWalt flashlight nowadays. It seems to put out better light as well.
Whether the house is vacant or not, you should take a camera with you to take as many pictures as you can. This really helps when you can’t remember a certain aspect of the house. Viewing the pictures is much easier than going all the way back over to the property. This is especially useful if you are wholesaling and the house is occupied.
This one comes in handy when properties are boarded up.
Checklists are not just for beginners. You may know what to look for at each property, but it is easy to forget one item that might cost you some serious money. This is something that carries over from flying. When I took my mom up for her first flight in a Cessna 172, she seemed concerned that I was going over the checklist before starting the plane. In flying, there is a checklist for everything. You can memorize everything, but the checklist is there to make sure you don’t forget something. Your inspection checklist doesn’t have to include every little thing, but it should include the big items that can get costly if missed (i.e., water heater, AC, doors…) Get AND USE a checklist. You can download mine on the Flipping Houses Resources Page. In flying, if you miss something serious, you can’t just pull over. In real estate, if you miss something, you can’t just give the house back.
This one seems like common sense, if you are meeting a seller. But, I don’t know how many times I’ve gone to get a contract out of my car, only to realize I didn’t have anymore!!! This is the time to get super stressed. The seller is ready to deal. You give them an hour or more to think about it and they might start hesitating. Always bring several copies of contracts. While you are at it, make sure you have several working pens.
You should always be prepared to make an offer on a property while at the property, or at least try to. Try to have some comparable sales in the area and a good idea of ARV (After Repaired Value). It’s best to avoid telling a seller that you will get back to them. If they are motivated and it is a good deal, you’d better be ready to make a decision. Drive the comps before viewing the property. Calculate your MAO (maximum allowable offer – this will have to be less repairs after you see the house).
Most phones now have adequate calculators. If yours doesn’t bring a calculator. You really don’t want to mess up a calculation when you are dealing with thousands of dollars.
This includes business cars, brochures and other items that enhance your credibility. I’ve got a tri-fold brochure that includes testimonials from people I’ve bought houses from. It has a space on the back for where I write in my offer. If the sellers do not decided to accept right then, I leave it with them so they can look it over, read it and let it sell them on the idea of selling to me. I’ve heard of some investors taking a photo album with before and after pictures of rehabs they’ve done. I wasn’t sure about this, but I’m sure it helps to build rapport.
Now that you know what you need, gather your gear and look at some el dumpos!
If you have anything to add, please don’t hesitate to mention them by leaving a comment. I will consider adding them to the list.Next: 206: Taking Massive Action
Next question. Where did you get your purchase agreement? Is there a template I can download somewhere? Do you use an agent? A lawyer?
I use the standard contract for the state of Texas. The Texas Real Estate Commission (TREC) contract. The same one used by Realtors. I do not use a Realtor or lawyer for the contract when dealing directly with homeowners.
Good idea to have the lead analysis done. I’ll remember that.
I hear ya on hand sanitizer. Its incredible how some people live. I don’t mind though, chances are they are doing the same thing to the place they have moved too. Another opportunity for another day.
You’re right about a lot of people making a lot of opportunities. I looked at one just now that is owned by an investor (private residence). Same situation. Had to bust out the sanitizer right away afterwards. Amazing.
Great blog you have going..i hope you keep with it! Do you purchase these properties under an LLC or outright? Also, I can’t seem to find any posts on the selling of these properties you’re purchasing..am I missing something? thanks!
I buy houses in Land Trusts. Basically, I set up a trust agreement for every property I buy.
Since I started blogging about it, I’ve only bought one and have another under contract. I have other properties that were bought before I started the weekly blogging so I am not including what I am doing with those. As these new ones are sold, I will be detailing how the deal went.
Hi Danny…this is all quite fascinating. Thanks for all your hard work on this. Can you share your probate letter with us? Thanks!
Thanks for the appreciation. I would share the letter, except it is from a course I had bought a while back and I didn’t change it much. Not sure it would be wise to share it as it is probably a copyright violation. I’ve been considering coming up with my own letter and I will share that.
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Really loving the blog. I’m learning so much!
Wondering if you’d be willing to share your property analysis checklist with us?
Of course I would be! I’ve uploaded it to the Flipping Houses Resources Page. Thanks for the idea.
I’m a huge fan of your blog and appreciate all the effort you and your wife are putting into it.
I was wondering how you went about estimating repairs in the early days, before you knew from experience what certain work would cost?
Did you bring a contractor with you to perform estimates during inspection? Was there any significant cost associated with that estimate/inspection process?
Thanks again for the best flip resource on the web 🙂
Estimating repairs in the beginning was a challenge, to say the least. I had virtually no construction experience. But, it was not something that was going to stop me.
For the first ones, I had a contractor give me a bid on the jobs for the houses I was looking at. Only the ones that were potentially deals though. The bids were free. The important thing is to really talk to the contractor to find out general costs for the usual items. Find out how much it should normal cost to replace a normal sized kitchen with new cabinets from Home Depot and new counter tops. Find out how much carpet replacement costs. Find out as much as you can about general costs. Spend a lot of time walking through Home Depot and taking notes on prices of items that you might normally use (vanities, faucets, paint, trim, doors, etc.).
In the beginning, be sure to be really conservative on your repair estimates. Some people waste time by trying to add up all the costs of every little item needed and it is just a big waste of time. You will never exactly guess a rehabs cost. Don’t be the guy that is calculating the exact linear footage of baseboard needed while the other investor that just used conservative rounded estimates is putting the house under contract.
Learn basic costs to replace water heaters, kitchens, AC units, bathrooms, roofs, flooring, windows, doors, etc. and just use those to figure your costs. Contractors won’t want to go through more than about 3 jobs without any hopes of actually ever getting the work. So, make sure you utilize their time and knowledge with each one you go to. You might consider paying them for their time to actually walk through the general costs (not regular homeowner prices though. we are talking about investor wholesale type prices for work done).
Great info sir. I appreciate it!
Estimating repair value is definitely what worries me the most. Is there no way of estimating cosmetic repairs on an 1100 sq ft home. With 15k in repairs on a property like that, wouldnt that be larger repairs. I had a contractor tell me that and another tell me that it was more around 8K. Probably the best thing would be to link up with an experienced investor huh?
Absolutely right. An experienced investor can give you an idea of what local contractors will charge for repairs. This is important because it’s usually cheaper if you can give them a lot of work.