Flipping Failure: 5 Mistakes to Avoid When Flipping Homes
It seems like everyone is trying to flip houses now. After all, it seems like such an easy way to make money. Put a little effort into a piece of cheap property to renovate it, and then sell it for profit. There’s a lot first-time house flippers don’t know about the process, though, and it takes more than watching TV to realize there are some serious pitfalls to this moneymaking plan. Here are five common mistakes people make when it comes to flipping houses. Pay attention and maybe you’ll be able to avoid them.
1. Not Enough Money
Real estate isn’t a cheap hobby, so don’t just assume the money will come rolling in. There’s the initial cost of the house, renovation costs, taxes and utilities, and, if you’re financing your acquisition, you’re paying interest as well. If the final sale price doesn’t exceed all these combined costs, you’re not making a profit, you’re losing money.
One good money-saving tip: If you’re doing renovating tools yourself, look online for deals on tools. Laguna table saws and parts, for example, can be expensive, but you can buy Laguna band saws online for very decent prices.
2. Online-Only Homework
As helpful as sites like Zillow and Movoto can be as a starting point, do not count on them to give you the lowdown on what the final house is likely to be worth. You’re going to need to talk with a local real estate agent, someone who has their finger on the real estate pulse of the city, otherwise you risk a major miscalculation.
3. Not Enough Time
The phrase “Time is money” is completely true in this case. Stay organized, stay prepared, and do your best to stick to your schedule. The longer it takes to renovate, the more you’ll be paying on taxes and utilities, and you never know when the market is going to drop and change your plans.
4. Skipping the House Inspection
Whether you’re buying for yourself or for house-flipping purposes, this is a good rule of thumb. Never, ever skip the house inspection. You risk missing enormous structural flaws that would cost thousands extra to fix. With a house inspection, you can root out homes with purely cosmetic flaws.
5. Doing It All Yourself/Doing None of It Yourself
Most of the time, both these options are wrong. The best method for flipping a house is to do everything you know how to do, and leave the rest to the experts. Don’t try to tackle the sale of the house or plumbing problems if you don’t know what you’re doing, but don’t hire an expensive painting team when you can use a paintbrush as well as anyone. Figure out what you can and cannot do, and divide up the work accordingly.