Triple Threat

What it is

Three things I look for when I’m buying a property, beyond the normal underwriting everybody knows about: the triple threat, the mirage, and the big six. The triple threat itself has three items: signs of bleeding, structural damage, and the pro diy. Each one points to problems you can’t fully see but have to price in.

Signs of bleeding come first. Bleeding means something continually making the house worse: water intrusion through a roof, around windows, at the foundation, or pest damage like termites. If the bleeding hasn’t stopped, the house gets worse every day. Once you stop the bleeding, the house can only get better from there. Structural damage is what bleeding usually leads to — leaning walls, sagging floors, cracked foundations. Not always from water; sometimes it’s a storm, a shifted footing, a settling slab. But most structural damage is slow, and it starts with bleeding.

The pro DIY is the nastiest of the three. Somebody who thinks they know how to wire, frame, plumb, or do structural work but doesn’t. I’m not talking about ugly paint or a bad trim job. I’m talking about work hidden inside the walls that a real contractor has to tear out and redo.

Why it matters

If any item in the triple threat is present, your budget is bigger than what meets the eye. These are clues to more work inside the walls you can’t see from the walkthrough. You’re not paying for what the house looks like; you’re paying for the risk of what you’ll find when you open it up.

This is where deals come from. You ever heard “no risk, no reward”? In flipping, that translates to: where the risk is higher, the price has to be lower. When the triple threat is present on a listing, you either pay full price for an overvalued property, or you use those items as leverage to push the price down to what it should be. Most sellers don’t fully see what’s in front of them. You do.

The pro DIY is the most dangerous because you can do things so wrong and hide them. I’m still opening up walls on pro DIY houses and finding work I’ve never seen before. Not malicious, usually. They just don’t understand how things work.

How it shows up

Bleeding shows up in brown water stains on ceilings, mildew smell in the crawlspace, moss or dark streaks on the roof, efflorescence on the foundation, mold inside the house, termite tracks in the wood. The first question on every walkthrough: is there bleeding, has it stopped, and what caused it?

Structural damage shows up in doors that won’t close, floors that roll under your feet, horizontal cracks in the foundation (vertical cracks are usually settling, horizontal means pressure), bowed walls, sloped counters. Most of the signs mirror bleeding because bleeding causes the structure to give.

Pro DIY shows up in the small stuff you can see: outlet covers that don’t line up, trim cuts that don’t match, paint lines that wander, mismatched materials between rooms, additions that look pieced together. If the visible work is sloppy, assume the work inside the walls is worse. Immediately bump the rehab budget and start pricing a harder demo.

The triple threat is detective work. You can’t see inside the walls, but you can see the clues outside them, and the clues tell you the story. Build the story for the seller too — explain why the things they can’t see affect what the property is worth. That’s how the price comes down.