Are you thinking about investing in real estate by flipping houses? If so, then make sure you read this blog post to discover the most expensive blunders that house flippers tend to make… here we will discuss the “mistakes investors make when house flipping.” At We Buy Houses Cash Dallas, we have been flipping house here since 1998. So, there’s some experience here.
When diving into house flipping in Dallas, Tx., it’s vital to steer clear of these critical errors to bolster your bottom line: underestimating expenses, insufficient research, selecting an unfavorable location, excessive property enhancements, hurrying through the project, and overlooking an exit plan.
When it comes to real estate investment, the 70% rule is a crucial guideline for home flippers. It assists in establishing the highest price one should pay for an investment property. In essence, investors should aim to allocate no more than 70% of the property’s after-repair value, minus the renovation costs.
House Flipping Mistake #1
If there’s one thing that every flipper learns pretty quickly it’s that you can never prepare for everything 100%. Brand new flippers often forget to “expect the unexpected.” Here is a mistake investors make when house flipping. For example, you can look at a property, assume it looks great, and then discover that there are termites. Or you might tear up a carpet and find mold.
While troublesome, these problems aren’t the end of the world but for investors who aren’t prepared for them, they can be a costly shock. So avoid this mistake by anticipating additional problems into your project plan, timeline, and budget.
Always walk through and inspect the house with an experienced inspector or do it yourself. When you spot something that may be a problem for you then or later, ask about it right there and then. If the seller has no idea what it is or what happened, then you need to look into it further. Count that particular problem as a financial burden and put an expense on it. Take a photo so you remember it is there. This can be a mistake investors make when house flipping, and it can be costly.
House Flipping Mistake #2
Another mistake investors make when house flipping, is to hire the cheapest labor possible. OUCH!! Rather than hire qualified professionals, flippers try to pad their profits by hiring any warm body. The problem is: cheap labor can actually be more expensive because they take longer and their work is not always up to the right standards (so it may need to be redone). Avoid this problem by hiring experienced tradespeople. You may spend more up-front but the work will be done right — quickly and the first time.
Anybody can hire workers standing in front of the neighborhood store. Here you must ask yourself, why would I hire any of these guys? Some may have experience, some not, and some have other problems that come along with them. I have done this myself, but I asked questions of the laborer right on the spot, letting that person know, that if he’s a screw up in the first couple of hours, he’s gone. Turns out, the quick interview on the side of the road helped in each situation. I have paid and fired quickly as promised.
House Flipping Mistake #3
Tell me this is not a mistake investors make when house flipping. It is, and this is the problem that flippers are simply not even aware that it happens, but it does happen! It’s easy to become emotionally involved in the flip to the point where you forget that you are investing in a property for someone… and often what happens is, the flipper starts making renovation and decoration choices that THEY prefer (versus decisions that are cost-effective and will help to sell the properly quickly). To avoid this mistake, set a firm renovation and decoration budget and continually remind yourself that your goal is to create a house that can be sold at maximum profit.
Each house being renovated must appeal to a mass of people in order to be sold quickly. We have been caught up in this scenario a few times and after the time, we decided to hire experienced designer. My wife. This worked for us all and it still does today. We all make a decision on each house we buy to fix and flip, and we stick to the design chosen.
House Flipping Mistake #4
Newbie flippers acquire a house and do all the heavy lifting to fix up the property, and then they make the mistake investors make when house flipping, of assuming that the sale of the property will be easy. In some markets it might be easy but in other markets that’s not the case! Avoid underestimating the effort required to sell and instead, prepare yourself for investing some additional effort in finding buyers.
We could talk about this one issue all day. Newbie house flippers do this soon after starting out and just after making them selves the promise of not doing this. A real estate investor who flips house for a living will do this more than once in they’re career. One can over create a rehab and one can over estimate that the house will sell fast on the retail market, just to sit there longer than expected.
Summary: Mistake Investors Make When House Flipping
Flipping houses can be fun and profitable… or it can be frustrating and problematic. But you can make sure it’s fun and profitable by avoiding the mistakes investors make when house flipping.
If you’re ready to get started with flipping and you want to check out what properties we have that might be perfect flips for you, click here to visit our web site, then enter your information on the online form, or give us a call at (214) 723-1304.
After many years in the house flipping business, we have learned what many other experienced flippers know. You will make mistakes when house flipping. No matter how hard you plan, or how much experience you have, mistake are going to happen. These are only some of the mistakes investors make when house flipping.
Here we want to Thank You for taking time out of your day to read our blog post. We hope you come back next week for another edition from We Buy Houses Cash Dallas.
