5 Mistakes That Can Make House Flipping a Flop
Watching home renovation shows make it look so easy that anyone can do it. They go in, already with funding, time, skillset, knowledge, and patience. But they don’t show you the mistakes that can make house flipping a flop.
Not enough money
The biggest expense in flipping a house is the acquisition of real estate. If you’re financing the house, you’re paying interest, and although the interest can be tax-deductible, it’s not a 100% deduction. When flipping a house, you’re also paying for the renovation costs that you hope to recoup. You may also run into unexpected expenses, such as a capital gains tax or home repairs you weren’t expecting.
Budgeting for enough funding can be difficult when your end goal is to make a profit, especially for first-time house flippers.
Not enough time
Renovating a house can be a time-consuming venture. It could take months even to find the right property, then go through the buying process. Once you have the house, taking the time to complete the renovations works around your schedule. Still, if you have a day job, you’re not able to complete the demolition, construction or refinishing as quickly as you would be able to if you could focus on the flipping full-time. Hiring a contractor, while speeding up the timeline, also costs money.
After the construction is done, you need to allot time for inspections and the time it will be on the market before you make a profit.
Not enough skills
Skilled professionals, such as plumbers and carpenters, often flip houses as a side-business because they already have the skillset, knowledge, and experience. Making a real profit in house flipping comes from sweat equity. If you enjoy laying carpet and are handy with a hammer, but can also install a sink and hang drywall, you can flip a house. However, if you need to pay a professional, it will reduce your end profit.
Not enough knowledge
When you want to get the most money out of a property, you need to pick the right property, at the right price, in the right location. Finding homes that are in foreclosure in a good neighborhood are probably your best option, but then knowing which renovations to make is key. Understanding the local zoning and tax laws before getting into a project should be taken into consideration. And knowing when to get out before the project becomes a money pit is critical.
Not enough patience
Professional house flippers will take their time, waiting for the right property during their research. Buying the first property you find, and hiring the first contractor you meet can ultimately end in a loss. Professionals will do the work themselves and instead of hiring a real estate agent to sell, will post the house “for sale by owner”, so maximize profits and minimize costs.
When you’re thinking about buying a house to flip, be sure to understand the risks involved. Renovo has deep ties in communities. We’re able to partner you with a team that will help you flip a house with enough funding, give you time, helping you with the skills and knowledge, allowing you to be patient, so you’re not making mistakes that can make house flipping a flop.