Historic districts can make deals losers from all the red tape and approval you have to go through.So your time to rehab goes much longer and bringing back the original character the committee wants can inflate your expected reno costs.A house of that age has many hidden bombs such as galvanized plumbing,radon,knob and tube wiring,asbestos,foundation problems etc.I think it's a marginal deal as well.

Basically, what are the hidden costs that a flipper may not think about?  

You just have to turn enough stones till you find the hidden treasures.

You also raise good points about instructing a potential buyer not to contact the homeowner, and how all communication goes through the one with an equitable interest.

Be it residential or commercial, I will listen to all instruction for the purposes of becoming a better investor...

And some coach type is using such contracts in their "instructional" program.

Hello, @Nicholas Moffett ,I just bought;The ABCs of Real Estate Investing: The Secrets of Finding Hidden Profits Most Investors Miss: Written by Ken McElroyLove it but that is just an opinion.good luck

@Nancy Curran I instruct my tenants when they move in that "dirt and damage does not equate to wear and tear".  

This came about during the last RE boom where people who didn't know what they were doing, rehabbed homes and then the new buyer found out that the electrics and/or plumbing hidden in walls was defective but the LLC that sold it to them had been dissolved and so they had no recourse.I do like the idea of having extensions written into the loan to start with, so if the rehab takes longer or just doesn't sell quickly, it's already covered.I do have a couple advantages, firstly my friend owns a third of some of my rentals and so the loan will be written with a clause that I can use part of his share of the rents to cover this loan if the loan goes over the fixed period of the term.  

Even on not-so-awesome deals there plenty of activity, so I cannot imagine that in a market like this there would be enough "hidden gems" to make a living of off.