Flipping houses has become an obsession nowadays. All you have to do is, just buy a cheap property, renovate it fast, and then sell it for a tidy profit. While flipping a house, there can be many things that can go wrong in a rush to make profit. Many people have begun to flip houses full time, and some have made tremendous profits. While, others have not been so lucky. This article will help you look at the five biggest mistakes investors make in this market and how to avoid them.
Not Doing Your Homework:
In order to know property prices in your area, you must do your homework and get familiar to what sells before contemplating a flip. If you know what the average three-bed, two-bath house sells for in your area, you will find it easier to spot a bargain house when it's under your nose. Make sure you look at numerous properties before you even think of buying. Find out the selling price before you make an offer and ensure that you realistically achieve a profit.
Not Having Enough Skills:
If you're handy with a hammer, enjoy laying a carpet, can hang a drywall, roof a house and install a kitchen sink, you've got additional skills to flip a house. Professional builders or skilled professionals, such as contractors, carpenters and plumbers will do very well to flip houses. Their knowledge, experience and skills help them find and fix a house. They usually flip houses as a sideline business to their regular jobs. On the other hand, if you've got to pay a professional to do all this work, the profits on your investment reduce.
Skipping the House Inspection:
Home inspection or survey will cost you some several dollars, but could save you even more with unexpected renovation costs. When you start your flipping career, you have to be smart enough to only look for properties that require minimal cosmetic changes. That is why it is important to get a house inspection done before you purchase any property. A house inspector is trained to spot out structural flaws and warning signs that you may overlook. So if you buy a house and then get it inspected, there are possibilities that you may end up incurring a loss because of the renovation cost incurred.
Under-Estimating Your Renovation Time And Cost:
You may be aiming to complete your renovation project in four weeks, but flip timelines are notorious for going wrong. Your plumber may be irregular or may be too sloppy. You need to be prepared for the worst-case scenarios.
It's not just the building costs that you need to account for. Your budget should also cover real estate closing fees, bank loan fees and potential extra mortgage payments if your renovations take longer than expected or the house fails to sell quickly.
Not Having Enough Knowledge And Patience:
To be successful as a flipper, you need to be able to pick the right property, in the right location, at the right price and at the right time. Even if you get a deal of a lifetime, you need to know which renovations to make and which to skip.
Professionals take their time and wait for the right property. Novices rush out and hire the first contractor that makes a bid to address the work they can't do themselves. Professionals either do the work themselves, or rely on a network of pre-arranged, reliable contractors or real estate agents. They understand that buying and selling houses takes time and that the profit margins are sometimes slim.
Before you get involved in flipping houses, do your research thoroughly. Like any other business, flipping requires time, money, patience, skill and knowledge to study the market and the flipping business as a whole. It certainly is not as easy as it sounds, because flipping means careful planning, doing your homework and expecting the unexpected.