Flipping homes are one of the hottest trends in the market today, but there are common mistakes that flippers make that can be detrimental to a project’s success. Before you dive right into the demo, here’s a few things you should consider:
Cost Of The Property & Renovation
A common mistake that flippers make is underestimating the cost of the overall project. Evaluating the cost is a two-fold approach. First, you need to look at the total cost of the home including its listing price, closing costs, fees etc. Next, you’ll need to put together a budget for overall repair and remodelling costs. Once you have those two crucial numbers, you can determine your all-in cost. Next, you would want to compare your all-in cost with comparables in the area to ensure that you can get back your initial invest plus some profit.
Time Needed To Complete The Work
TV magic aside, homes can take a substantial amount of time to flip. In all reality, a home that will be priced well enough for you to make a good profit will probably be one that requires more than just paint. Flippers commonly underestimate the amount of work behind the project and don’t adequately build a contingency into their timelines. Before jumping in with both feet, ensure that you have a realistic allocation of time to get the home on the market. If you’ve taken out a loan, this is even more important as your payback schedule may impact how fast you need to ‘flip’ the house.
Location, Location, Location
So crucial, we said it three times. Let’s be honest…you wouldn’t build a mansion in the middle of a low-income neighbourhood and nor should you purchase a home in an undesirable area. When settling on a location you want to ensure that you identify your target buyer an ideal price range, and then buy a house in a neighbourhood that would appeal to your key demographic. The old saying goes ‘if you build it they will come…but not if you’re in the wrong neighbourhood. Don’t fall victim to this common mistake that flippers make by doing your research and consulting a real estate professional who can give you key insights.
How Much Risk Is Involved?
Our final common mistake that flippers make is underestimating how much risk is involved. If you’re a flipping virgin, you need to know that you don’t always make money. You never know what you’re going to find behind the drywall and could end up with massive structural and costly electrical projects on your hands. The best advice we can give is to have a healthy contingency in place, abide by a strict budget and be willing to compromise on finishes if you need to make up costs.
The best first step in flipping a house is working with a knowledgeable agent who can steer you in the right direction and negotiate the best deal possible. Put us to work for you and contact us today!