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Tuesday, February 20, 2024

5 House Flipping Mistakes to Avoid

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Because of its state of disrepair, you get it for a good deal. You spend a few weeks fixing the place up, slapping on a new coat of paint– literally or figuratively– then quickly list and get the place sold.

These days, house flipping is a popular concept. There are entire TV shows devoted to it. It may even be something you’ve thought about doing yourself.

Yes, on paper, it’s pretty simple. In practice, there are a number of reasons why your house flip can go wrong.

Here are five house flipping mistakes to avoid that could derail your investment:

Not having enough money.
Not having a business plan.
Not having property insurance.
Not understanding the market.
Overpricing your listing.
Not Having Enough Money
You’ve probably heard the old expression about how you need to spend money to make money.

You may end up losing money on your house flip if any of those components are out of place. That’s what makes it so necessary to have a business plan where you lay everything out in advance– and maybe leave yourself a little room for error.

Well, that’s certainly true in house flipping. Before you can realize a profit, you’ve got to sink a little money into fixing the place up– making repairs, adding new fixtures, replacing appliances and more.

What happens if you buy a house that’s in disrepair, and then realize you don’t have the resources you need to fix it up? That can wreck all your plans for a successful house flip. Always make sure you’ve got some cash on hand before you invest in a house flip property.

Not Having a Business Plan
House flipping isn’t just about getting the place sold. It’s about getting the margins. It requires you to not overpay on the front end; to stay on time and on budget as you make repairs; to list and sell expediently; and to get a certain sale price.

A business plan could include:

[Read: How Many Homes Does It Take for First-Time Buyers to Find the One?]
Overpricing Your Listing
Pricing is always key when it comes to how to sell a house. When you’re flipping, and that’s very much the case.

Not Understanding the Market
A successful house flip isn’t just about the property; it’s about the market itself.

House flipping isn’t just about getting the place sold. It can also help you protect your house flip against fire, flood or materials and items lost to theft.

Make sure you do your due diligence, checking comps and surveying the market, before you price your home. And by the way, you’ll want to start thinking about pricing before you invest, ensuring it’s actually going to be worth your time.

Yes, it’s going to eat into your margins just a little. Imagine the alternative– buying an investment property and losing everything in some kind of natural disaster. Insurance can make that a non-issue.

Simply put, you can get a great deal on your initial investment, you can spruce the place up and you can list it for a competitive price. If the market’s bad, you may still have a hard time selling.

These days, house flipping is a popular concept. That can wreck all your plans for a successful house flip. Always make sure you’ve got some cash on hand before you invest in a house flip property.

How much are houses with similar floor plans and square footage listing for? How are neighboring houses that have been listed doing? How long have neighboring houses been on the market?

House flipping can be exciting– and profitable. That’s only possible wh

A list of all the repairs you want to make.
A list of prices for everything you want to replace so you can stay on budget.
A schedule to make sure you are spending the right amount of time on certain projects.
[Read: The Guide to Selling Your Home]
Not Having Property Insurance
One of the top house selling tips for flippers: Get insured.

Yes, really. Property insurance isn’t just for your residential property. It can also help you protect your house flip against fire, flood or materials and items lost to theft.

You’re leaving money on the table if you undervalue it. And if you overprice it, you won’t get any takers– and the property may just languish on the market. Either way, your investment is in trouble.

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