Baseline

What it is

Baseline is the minimum standard for the neighborhood: what the renovated house needs to look like to be considered “sold and done” rather than “needs work.” It’s the floor of the sellable range. Not “cheap” — “enough.”

Here’s how Ross explains it: you run comps to see what a house is going to sell for after you renovate. Same applies to your renovation plan. You look at what other things in that neighborhood that are renting or selling, what finishes they have. Do they have granite or butcher block? LVP floors or carpet? Updated light fixtures? You take the minimum finishes — the baseline finishes — and that’s what you do. “I’m not going to put a dollar into the property that I’m not going to get two back in return.”

The baseline varies by neighborhood. Baseline in a D-class rental market is different from baseline in a B-class owner-occupant market. You calibrate to where you are.

Why it matters

The HGTV Dilemma: a lot of people have learned to flip houses by watching TV shows. They think every flip needs to be beautiful, unique, high-end. That is not how the real pros make money. People on HGTV get paid because you’re watching — ad revenue, sponsorships. That’s not a business model the average solo investor can copy.

Ross built a masterpiece in Denver. They put him in 5280 magazine. Built a two-story indoor waterfall. Lost money because the neighborhood couldn’t support the price point. Across the street, Glenn put in budget floors, left the carpet in some bedrooms, spent maybe less than $30K total, sold for $600K. “I was over here building the Taj Mahal and losing six figures.”

After that loss, Ross made a promise: never over-renovate again. Only optimize. The market does not reward over-finishing a B-class house with quartz waterfall islands. The range of comps caps what the house can sell for, and that cap is set by the neighborhood, not by taste.

How it shows up

The baseline steps in Ross’s four-step process: step one, know your comps — what’s the absolute top price homes are selling for in that neighborhood, and what finishes do those homes have? Step two, do the baseline — what is the minimum standard? Match the standard across the whole house. Step three, the big three — strategically elevate on the first things buyers see (curb appeal, entryway, wow room). Don’t elevate everything, just the filter. Step four, stick to the dang plan. Every small add-on chips away at margin.

In a B-class neighborhood with comps at $180-220K, baseline looks like: LVP throughout, paint in a neutral warm white, cabinets painted or replaced with shaker, basic counters, subway tile backsplash, a matched hardware package, landscaping mowed and mulched. The kitchens and baths in a baseline flip don’t win design awards. They sell to the first buyer who walks in and sees a clean, consistent house that matches the neighborhood. That’s the job.

On rentals, baseline is even simpler: no matter what you do to the property, if section 8 is paying $1,067 a month in that neighborhood, you’re getting $1,067. Why would you do an $8,500 remodel and get the same rent? Achieve the baseline and stop. Every win you can get, put that money in the bank — because problems are coming.

Related

range of comps, big three, scope of work, hgtv dilemma, over renovating, scale of livability