Flipping a house requires lots of work such as designing and overseeing renovations, budgeting, and hiring out contractors. You need to make sure that you know the housing mmarket, your own money and time budget, and what your profit margins are before going into any new project. Flipping a house is labor intensive and if done correctly, the reward is truly worth the effort. Below we have listed the top mistakes that any new home buyers, or investment property owners will want to avoid when looking to flip a house.
Do not spend too much money on the house
Of course, it is easy to get swept away in the project and to blow your budget by thousands if you’re not careful. Whether that is upgrading the heating system, or splurging on high-end finishes, you don’t want to break the bank on the house. Although this may seem counterintuitive, it is important if you want to get any financial gain out of the house. Whether you are planning on living in the house or selling it, ensuring that you spend less than 70% of your projected after-repair value for the home will pay off in the long run.
Underestimating repair costs
If you’ve found a property that promises a big return, make sure that you do thorough back checks and inspections on the property before you begin. That way, you can get an accurate picture of what the repair costs will be altogether. Bringing a trusted contractor with you to walk through the house as you plan your design will help you to accurately gauge what your dream repair will cost you. And once you have established a budget, it’s always best to add on an additional contingency on top of that number.
Biting off more than you can chew
Underestimating the size of a Reno is one of the biggest mistakes you can make in the world of flipping. Whether that is buying too expensive right out the gate or underestimating the time it will take and the budget, always make sure that you can handle the worst-case scenarios. Take precautions at the start with what property you are buying. If you’re new to flipping, don’t buy a gut job in a good neighborhood. Only once you’ve gotten more experience with flipping can you begin taking on bigger jobs. Buy only what you know how to do. Start slow and work your way up.
Being clueless in the market
It is always best to go into flipping knowing exactly what the market looks like. If you go in blind, not even knowing what the housing market is, will only spell disaster in the long run. You can either enlist the help of a professional or do your own research. Either way, ensure to educate yourself. This can be anything from what houses in certain areas usually cost, knowing the selling features of houses in the area you want to buy, or just keeping up with trends in the local housing market. This will ensure that you make a good decision in which house you buy.
Depending on which neighborhood your house is in, adding sleek, high-end touches such as a chef’s kitchen or a marble entryway may hurt your selling potential in the future. It is important to research what the other houses are offering.
Knowing what home buyers are looking for in that specific neighborhood will ensure that you will not go overboard with amenities or designs or finishing touches. Saving you time and money in the future when it comes to selling your newly flipped property.