When I first learned that my wife was pregnant 14 years ago, I was certain we’d have a boy.
I’m not sure why. At the time I guess I figured I was a boy, and my only sibling was a boy. Plus, I wasn’t good with girls. In elementary school I had no interest in them. And by the time I was interested in girls, they had no interest in me.
My biggest problem was I didn’t know how to talk to them. It would take me over 20 years to learn that it’s not how you talk to women that really matters, it’s how you listen.
I suppose that’s why God blessed me with two beautiful daughters. It didn’t happen overnight, but eventually I discovered the best way to connect was to shut my mouth and open my ears. As a husband and father, this means being prepared to answer questions.
Unfortunately, because my wife and daughters are much smarter than I am, it also means being questioned. A lot.
“Why did you do that?” is one I hear most often.
Always Ask This Question
To successfully fix and flip houses, you’ll need to ask a lot of questions too. However, there is one question that is the most important of all. Whenever I’m brought a deal from a wholesaler, Realtor or distressed seller, I always ask this (to myself):
“Why doesn’t anyone else want to buy this property?”
It could be I’m the only fix and flip investor that the wholesaler, Realtor or distressed seller has told about the house. However, this is unlikely. Nearly everyone shops his or her deal to multiple investors. And if you’re looking at a multiple listing service deal then everyone has seen the house, and passed on it for some reason.
Here are 5 likely reasons no one wants to purchase the property:
It’s in a terrible location
There’s a major problem that can’t be fixed (inexpensively)
Prospective buyers lack vision
Prospective buyers lack market knowledge
It’s easy to figure out 1-3. If you know how to determine the after repair value of a property it will only take a few minutes to learn if the seller’s asking price is too high. And a quick Google Maps search can help you out with location (check out this post to learn why Google Maps is such a valuable tool for fix and flip investors).
As for a major problem, those can be more difficult to spot. That’s why if you’re first starting out fixing and flipping houses I recommend you hire a home inspector. They can reveal structural and mechanical problems the untrained eye can’t see.
In Milwaukee, many of the properties we buy have basement and foundation issues. We now have an expert on our team that looks at all our prospective deals for any defects.
With Vision and Market Knowledge Comes Opportunity
Most professional fix and flip investors are successful because they have vision, and they understand the market. They make lemons out of lemonade and buy properties less experienced investors pass on.
What does that mean?
First of all, savvy rehabbers recognize the potential for a distressed property. They know how to efficiently and cost effectively adjust, reconfigure and finish it in a way that will attract high-paying retail homebuyers.
When I walk through a property for the first time I’m looking for ways to add value (check out this post for more tips on how to add massive value to your next fix and flip). This may include reconfiguring the floor plan so it’s more functional.
Can I open up the kitchen to the family room? If there’s no master suite can I add one? Is it possible to add square footage to the home? If the ceilings are low can I easily raise them? Can the soffits in the kitchen be removed for taller cabinets?
In this house we tore out the soffits and installed 42” upper cabinets.
Secondly, professional fix and flip investors understand supply and demand trends. For example, in the neighborhood where our cat pee house was located there were no other fully remodeled active listings on the multiple listing service. We knew there was a tremendous amount of pent up demand in the neighborhood.
This is why we sold the house in two days and net $36,000 in profit.
How to Become a Professional Fix and Flip Investor
So how do you learn all this stuff? Well, like anything else it will take some practice. I recommend you start out by looking at fix and flip projects investors in your area have recently completed.
Almost every day I search the multiple listing service for completed rehab projects. Then, I make note of their design styles and finishes. Another great way to learn what homebuyers want is to visit new home subdivisions. Tour their model houses for ideas. These companies spend thousands of dollars paying top architects to design floor plans.
And check out the video below. I explain how we plan to remodel an 88-year old home in Milwaukee. You’ll also learn why it’s important to always turn the water off before you start the demo work.