Flip Tip Summary
When evaluating deals, it’s important to consider the risk of high dollar repairs you may have missed that can eat your lunch. We’re sometimes so eager to do deals that we overlook something massive…which can turn that sweet profit projection into a nightmare. Matt Neisser joins us today to share some tips on how to make sure this doesn’t happen to you…in this FlipNerd.com Expert Tip!
Flip Tip Transcript:
Mike: Hey, it’s Mike Hambright from FlipNerd.com and we have a quick Expert Tip to share with you from Matt Neisser of Crestar Funding. He’s going to tell us how to avoid major repair issues that you may otherwise miss.
This Expert Tip is sponsored by RealtyMogul.com, B2R Finance, and National Real Estate Insurance Group.
Matt: What I always say is, what are the largest items that you could miss if you didn’t have a checklist. And really, there are a couple things that we see commonly from both our lending experience and real estate experience. This is, I apologize to all the people that work in newer markets where this might not be relevant, but in some of the older markets this is quite prevalent. So, is the electrical system up to code and a newer system. You’d be surprised when you see [inaudible 00:00:56] tube in an old house. You’ve probably never seen one Mike, but it’s surprising when you see some of the older houses with them.
Two is, simple question, is the property on public water and sewer and gas? That’s a simple question you could ask the seller or agent or simply call the utilities and ask. If it’s not, then you know particularly that we might have an oil tank somewhere. I could have a septic system in the backyard, or some type of potential larger environmental issue that you need to be very careful of. So for example, we see someone recently that didn’t know that the property was on septic. If they had simply asked from the get-go, “Are we on public water and sewer?” They would have avoided that issue. And their $20,000 budget turned into a $40,000 or $50,000 budget.
And then the final one is in states where , particularly in New Jersey and Pennsylvania and some of the others, where there’s a lot open records that you can ask about environmental issues. You can literally log into a website in New Jersey, the NJDEP, and look up any address in the state and find out, are there any historical environmental issues with this property. And that’s the scary part. And again not to scare anyone here, but if you have some type of environmental issue, your whole budget could be completely outside of, it could be double, triple, quadruple, what that simple new kitchen and tile that you thought you were going to do to the property.
So again, it goes back to my initial [inaudible 00:02:32] interview about having some type of standardized checklist and just thinking about common questions that you can avoid major mistakes. And that’s the key to investing. Avoid major mistakes and everything else sort of falls into line.
Mike: We’d like to thank Crestar Funding , MidAtlantic IRA, and Renters Warehouse.
Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers, or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.