House flipping can be a fun, cost-effective way to earn a substantial amount of money within an expedient timeframe. However, as any seasoned flipper can attest, not all flips are guaranteed to go off without a hitch. This is particularly true when it comes to fledgling flippers. Since various reality shows and real-life success stories make house flipping seem much easier than it actually is, many first-timers wind up overwhelmed by all the work the flipping process entails. To help ensure that your first house-flip goes as smoothly as possible, make a point of avoiding the following missteps.
Not Having the Property Inspected
Regardless of whether or not you intend to flip it, you should never invest in a piece of property without having it thoroughly inspected. Having potential flips examined by seasoned electricians, plumbers and building inspectors can provide you with a solid idea of how much work these properties require and help you determine whether they’re truly worth your time.
So, no matter how confident you are in a potential investment, make sure to have it inspected before getting started on the paperwork. Depending on what an inspection turns up, you may be able to request a significant reduction in price. When exploring house flipping investment opportunities, you’re bound to come across properties that require a substantial amount of work. However, in the absence of a proper inspection, you may discover that a property needs far more work than you ever could have imagined.
Working with Unreliable Contractors
In many cases, flipping a house requires a tremendous amount of work to be done within an expedited time-frame. The more work a home needs, the more thought you should put into the contractors you hire. If you know any experienced flippers who have had good experiences with certain contractors, take care to ask for their contact info. Conversely, if you can’t depend on recommendations from friends, do a little bit of online research before committing to work with new contractors. In addition to confirming that a contractor is fully licensed and bonded, look for feedback from former clients. While every contractor is bound to have an unfavorable review or two, you may want to explore other options if you find that bad reviews far outnumber positive ones.
Not Writing up a Budget Before Beginning Work
One great way to budget for house flipping is reserving a rental dumpster, as they tend to be more cost effective than traditional junk haulers.
If you dive into a house-flip without writing up a workable budget, you’re setting the stage for financial strain. After making a list of every job you need done, take care to get estimates from the appropriate contractors. Even after you’ve added up these estimates, you shouldn’t assume this will be the final cost. While the final cost may very well be in the general area of the combined estimates, it’s best to assume that the entire job is going to cost at least a little extra than initially projected. With this in mind, you should set some extra money aside for incidental expenses and potential emergencies.
Failing to budget properly may result in you having to put the flip on hold temporarily or indefinitely. Just remember – having the capital to purchase a home doesn’t necessarily mean you have the capital to flip that home.
Failing to Research the Area
Before committing to a flip, it’s imperative that you research the area in which the property is located. If the home in question is located in an area that’s undesirable or generally unpopular, you may not be able to command the intended price, regardless of how thorough a job you do flipping it. So, before making an offer on a home you intend to flip, take some time to research home prices in the area. Based on your findings, you may discover that a home isn’t worth your time or attention and ultimately save yourself a tremendous amount of hassle.
It’s easy to see why house flipping has become such a popular vehicle for generating income. After all, on the surface, flipping a home and making a handsome profit seems like a reasonably simple concept. However, as many first-time flippers have found, going into this process unprepared can result in tremendous stress and staggering financial loss. In the interest of avoiding such undesirable outcomes, steer clear of the missteps discussed above.