House flipping is fast becoming one of the most popular ways to invest and make money, spurred on by the increase in popular shows like Flip this House and Flip or Flop.
Although it is possible to make decent profits flipping properties, it is by no means as simple as many of these shows make out, and if you want to be successful, there are several common mistakes you’ll need to avoid…
Not Having Enough Capital
If you want to successfully flip houses, you need to have plenty of cash available to you.
Not only do you need enough money for a down payment, but you’ll need enough to cover the mortgage while you work on the house, money for materials, cash for your contractors and enough of a buffer to cover any unexpected expenses.
If you aren’t really about how much capital you’ll need to get started, and if you don’t carefully cost it out before buying, you could find it difficult to make much of a profit.
Not Having Enough Time
Renovating a property is not something that can be done over the course of a couple of weekends – it can take weeks, even months of continuous hard work to get a property ready for resale.
If you plan to do much of the work yourself, you will need, then to ensure that you have a long stretch of free time in which to work. Even if you’re just overseeing, if you want to ensure the work gets down to a high standard and the contractors don’t slack off, you’ll need to be onsite regularly.
If you don’t leave enough time and the renovation drags on, you’ll start racking up interest costs, etc., which could wipe out your profit margin and make the whole thing for naught.
Not Having Significant Knowledge
Just because you’ve watched every episode of Flip or Flop and you’ve done a little DIY around the house, doesn’t mean you’re qualified to renovate a property!
Unless you’re clued up on the best neighborhoods to buy, the best properties to renovate and how to actually organize a renovation profit, there’s a good chance you will fail or the project will become a money pit and you’ll have to sell to an ‘As Is’ buyer, about which you can find more at Wren Realty.
So, before you even think about looking at suitable properties, do your research and do it well.
Not Having Patience
If you get the idea in your head that you want to flip a property and you go in all guns blazing buying the first property you find with the first contractor you come across, just because you don’t want to wait, well it doesn’t bode well for your success.
Professional house flippers are in no rush to start a new project; they take their time and wait for the right property to come along, the right contractor to become available and the right time to present itself. You should also do this if you want to succeed.
The bottom line: House flipping can be lucrative, but only if you take your time, build your skill set and do your homework. It is these things that will prevent your house flip from becoming a flop.