The first step in finding a house is to define the house you want. If you take the attitude that you do not know exactly what you want but you will recognize it when you see it, then you are headed for trouble. One of two things will happen. Either you will spend far too much time looking at everything and become discouraged, or you will jump on something inappropriate, simply because it has some emotional appeal, and end up getting hurt.
Pick a flipping strategy. Are you looking for a housekeeper flip, television flip, vacancy flip, or something else? List the characteristics of a property fitting your strategy. Then ask yourself: “If I cannot see these characteristics from the street or find them from public sources, how do I find out about them?” Appendix D has a list of possible sources of information about potential flip opportunities. One example is cleaning services that specialize in fire damage or other insurable losses. Often, the homeowner has a large insurance check to pay for the repairs but is too traumatized by the event to tackle renovation. Many of them would be willing to sell the house to you for little money and assign the insurance check to you.
Next, I suggest targeting a particular neighborhood or two, or a particular school district. Learn everything you can about the area, including market rents for houses, sales prices for homes, major employers for residents, and the local churches, grocery stores, and community centers. Make a note of any houses with poorly maintained lawns, peeling paint, constant “for rent” signs, or indications they are vacant. Write down the addresses. Call the local tax assessor to find out the names and mailing addresses of the owners. You want to be the local expert for the area you picked.
Now you are ready. You find flip opportunities by looking for “for sale” signs on suitable properties or by cold calling potential sellers in the area you targeted. Remember, a lot of people you cold call will tell you they are not interested. You have to be able to handle rejection gracefully. On the plus side, though, today’s rejection might be tomorrow’s prospect or might refer other prospects to you. The trick is to stay in touch, even if you have been rejected.
Naturally, you do not want to keep asking the same people if they want to sell their houses to you. Instead, mail them note cards once or twice a month. Ask them for referrals, and offer to pay a referral fee if allowed under state law. Contact your local real estate commission to find out whether or not it is legal to pay referral fees to someone who is not a licensed real estate agent. If you are just asking for referrals, you will not feel like a pest. Of course, if that homeowner decides to sell, you will be the first person he or she calls.