If done correctly, flipping a house can make you a quick profit. Besides the generous rewards, flipping a house gives you the satisfaction of bringing out the property’s full potential. However, there are some risks involved, such as stress and the risk of loss. We have compiled a list of house flipping mistakes you should avoid to prevent loss.
Spending too Much
One of the most common mistakes people make is spending too much buying a house in the first place. It would be best if you took time scouting for a house that leaves you a significant profit margin, all costs accounted for.
Most people often underestimate the costs involved with flipping houses. They don’t bother planning for every penny – a big mistake. While estimating big items like flooring and paint is easy, finishing items can blow up the cost. That’s why creating an exhaustive checklist that factors even the smallest items like door knobs is important.
Hiring Cheaper Professionals
Undoubtedly, the goal is to make as much money as possible from the flip. However, that doesn’t mean hiring cheaper, less-qualified professionals. As you know, flipping houses involves a lot of repairs. Therefore, getting an unqualified person could lead to more expensive repairs in the future or delay your reselling plans.
Make sure you get reputable contractors. Also, don’t be afraid to replace someone mid-project if you are unsatisfied with their work. Most importantly, look out for contractor red flags, such as those who ask for big payments upfront.
Not Studying the Prevailing Housing Market Trends
The housing market trends determine how much you stand to make upon completing the project. You need to understand whether it’s a seller’s or a buyer’s market. The seller’s market is a situation with more home buyers than existing homes for sale. In such a market, house prices go up. It could also mean bidding wars between buyers.
On the other hand, a buyer’s market has more homes than prospective buyers. It would require sellers to lower their prices or give an incentive. You might be tempted to buy a home during a buyer’s market, hoping it will soon turn into a seller’s market. However, the trend could last for months and even years – meaning you won’t make as much as you anticipated.
Setting the Wrong Price
Most first-time flippers struggle with picking the right price for the house once it’s ready. When setting the price, you must consider how much you have spent and how much the market is willing to pay. You also have to consider other factors like proximity to local amenities and taxes. It would be a good idea to get the help of an experienced real estate agent – they often know about pricing for different locations.
Be Careful of the Location
No matter what plans you have, your house’s location matters a lot. For instance, no amount of remodeling will cover up for a bad road. Therefore, only go for properties in prime locations. Once you’ve found a property you like, we are here to hold your hand for the rest of the journey. Give us a call today to begin planning your next house flipping project and learn more about the best way to flip houses.
Categorised in: Home Remodeling