When Flipping Houses Avoid Making These 5 Mistakes!

Flipping Houses simply put is buying a house with a plan to sell it for profit. This process can be very complicated and there area many decisions to make from the start. Some are so focused on making a profit that they tend to overlook the basics and end up in a sticky situation. In this article we'll look at the five biggest mistakes that investors should avoid making when flipping or renovating houses in this market. 

1. Insufficient Funds

You need to first figure out how you are going to pay for your property and have a exit strategy before you actually purchase anything. If you choose to finance the deal then you need to have a legitimate vendor on hand and don't forget about the interest and points fees. Even though interest is tax deductible it is not 100% deductible.

If you choose to pay cash, you will eliminate interest but then you will need to consider holding costs such as utilities, taxes and insurance. Renovation costs must be pretty accurate as you don't want to under calculate what those may be. Remember, the sales price must always exceed the cost of purchase price + repair cost.

Lastly, don't forget about those capital gain tax.

2. Missed Deadlines

Flipping and Renovating houses can take a lot of time to properly complete. With inspections and problems that may occur this process can take months and can surpass the original timeline you had planned. Once all renovations are complete you still have to invest time into marketing the property so that it can sell. Make sure you consider all of these factors when flipping. Allow room in your timeline for unexpected mishaps.

3. Doing the Work Yourself

If you are handy with a hammer, enjoy laying hardwood floors, can lay a nice roof, install a kitchen sink and hang dry wall then go ahead and flip that house. If you do not possess these skills then you will need to hire a professional to do all of this work for you. This cuts into your profits and you need to consider this cost as well. Shop around and get quotes from at least 3 different contractors before making your decision on who to hire.

4. Not Enough Experience

To be successful, you need to be able to pick the right house, located in the right area, and priced just right. You can't expect to sell at $170,000 in a neighborhood where the market value is $100,000 just because you purchased at $70,000. This can happen but it is highly unlikely. You need to know which renovations to make and which ones to pass on. Even if its the deal of a lifetime you need to understand when to cut your losses and get out before your project becomes a huge money pit.

5. Impatience

Do not rush out and purchase the first house you find with equity, take your time and make sure it is a solid deal. Do not rush out and hire the first contractor that makes you a bid, get more bids from others, check credentials, and references. Do not rush out and hire a realtor to sell the house, be patient and post ads on classified sites as for sale by owner. This process is quite reliable and as long as the house is nice and priced right it will sell fast. This eliminates any realtor commission fees which will cut into your profit.  

Professionals understand that buying and selling houses can take a lot of time and that sometimes the profit is small. With this knowledge you must practice patience because eventually if not instantly it will pay off!

In conclusion, before you start flipping houses, do your research, know what to expect and know what you are doing. Flipping houses is not a picnic, it requires time, money, skill, and patience. If you avoid these mistakes and learn from the other mistakes that you will make then you are well on your way to making BIG profits! If you are interested in buying or selling a house call now at (404)-220-7139. We have a huge inventory of houses for sale and we pay cash for houses as well!