Sounds like an oxymoron to those who deal with house flippers, eh?  lol.

  Despite the irony of such words being strung together in that order, there are a number of best practices, customs and common traditions which converge here to form a loose basis that distressed property buyers should consider.

   Firstly, the abstracting of title should be done at the county records office.  That is to say that commercial subscriber services are all good and fine as cross-checks regarding lien priority, but they often miss-index or simply miss data.  Any lawsuit that arises from the title chain will certainly incorporate questions about how the investor acquired his title chain and where.  No online service is going to issue a notarized affidavit about how the investor researched their database.  However, the county records index and documents are certifiable and valid as such in court. 

 Secondly, using a professional title abstractor to do the research is important.  This is a person who is specialized in understanding title matters and who can attest under oath to having followed the standards and practices of his profession.  A casual investor poking about in the records may be great at revamping and marketing a house, but is unlikely to know as many ins and outs of a title search.  As such, the standards of the title industry should be the standards by which an investor seeks to adhere.

  Thirdly, investors should be adhering to basic good business practices.  A written business operations agreement, whether a partnership contract or corporate charter or LLC agreement is very important for all investors and owners to know their rights and duties.  Furthermore, miscellaneous professional liability insurance for the managers / officers / administrators is an valid consideration when the stakes are high like in home sales.  Adhering to the operational boundaries established by agreements and contracts are simple, yet foundational standards in and of themselves.

  Finally, due diligence prior to investing means looking at every possible resource for information about a home and its owners.  Building & Planning permits, sewer laterals, business registries, zoning,  CC&R's, mapping easements, civil lawsuits, bankruptcies, and assessments are just the starting points for determining cost to risk ratios.  Smart investors observe and strive to understand market forces on national, state, regional, and local levels.  They are guided by the good common sense of market investing.  Each and every consideration creates a new data set and a new parameter of operation. 

  The differnce between a wise investor and a fool will be in the final outcome when money is counted at the end of the day.  Refusing to spend up-front for quality research will save hundreds over 12 months, but could cost tens or hundreds of thousands in lien penalties if these best practices are not followed.   How kind are your friends when you lose their money and how do you live with yourself if you let that happen?