The housing market is showing signs of bouncing back but is still very shaky. People who got into house flipping prior to the real estate crash went from making very impressive profits to going bankrupt in a matter of months; this is mainly because they had multiple properties, could not sell any of them or lacked enough capital to pay the bank. This led many investor properties into foreclosure after the investor had made deep investments during the flip. Now that we are somewhat out of the woods, people are again getting back into flipping and now may be a good time to jump right in; many foreclosed houses are selling for less than the land they sit on is worth. If you have the money to spend, investing into one of these homes could mean big returns, even in this market.
Where You Can Cut Corners
Paying full market value for a total overhaul on a house is not what flipping is all about. House flipping is about maximizing your profits and minimizing your expenses. The first trick to cutting corners is doing as much as you can on your own. Most people can work a paint brush and screwdriver so there’s many things you can do on your own (this is also known as sweat equity). If you aren’t willing to touch up walls, change fixtures, and get a bit dirty then house flipping is probably not the best use of your time. However, there are major renovations that you probably can’t do on your own. For these tasks you should consider finding a contractor that you can use for your entire house flipping needs. Typically, if you build a good relationship with a contractor and use him/her on multiple projects you will probably receive a better bid price from them.
Mistakes That Usually Lead to Failure
There are many mistakes that you might make while flipping houses. Here are the top three most common ones to avoid if you don’t want to end up at a loss.
Failing to create a plan
From the start, you need to know what you are getting yourself into. The best way to do this and help put everything into perspective is to have a well thought out plan. You should also have the house inspected by a professional before you purchase the property so you are aware of possible problem areas that you may have to deal with. If you do decide to take on the project after the inspection, decide what your budget is and that will help be the foundation for your plan. After you decide how much money you want to spend, then you can make decisions on details.
Not making a big enough investment
When it comes to flipping houses, you have to open your wallet and spend money to make money. Many people only see the initial price offering and the possible profits that will flood in after a few simple renovations. Covering up a few scuff marks and upgrading a light fixture or two isn’t going to get you anywhere. Some people try to cut corners in all the wrong places due to budgetary constraints and end up paying for it in the long run.
Letting time get the best of you
Lots of people lose patience with the project of remodeling and try to speed things up by not doing a good job on certain tasks. Another time mistake they make is not waiting out for the best price on the house. Realtor’s usually take 30 days longer to sell their personal homes than comparative houses sold on the market by non-Realtor’s- take a page out of their book to maximize the end profits.
Andrew Miller is an experienced Social Media expert and Author. He has worked in marketing for over a decade and finds his passion in bringing concepts to life for the world to enjoy. He is also an avid legal blogger and currently working on a book with his wife about social entrepreneurship. He is a true Socialpreneur and finds that his goal in life is to be an agent for positive social change through both his writing and business endeavors.