On the surface, house flipping looks like a walk in the park. All you have to do is buy a run-down house, fix it up, add a few cosmetic touches, put it back on the market, and make a huge killing. In 2020 Alone, house flippers flipped over 57,000 homes, and that’s down 6.7 % from 2019.
Proper house flipping requires making sound decisions and getting your timing right. There’s more to house flipping than curb appeal and aesthetic, and that’s where many house flippers go wrong. If you’re looking to get your foot in the house flipping game, you better do it the right way.
To help you out, today, we’ll be highlighting a few mistakes most house flippers make, especially when starting.
How To House Flip
Before we get into what not to do when house flipping, let’s look at how to house flip the right way. If you want to flip a house correctly, here’s what you should do.
Get Familiar With The Neighborhood
The first step is to do your homework on the real estate market and find the ideal location to invest in. You can work with a real estate agent who can advise you on the best property to invest in.
Analyze Your Skillset
Extensive knowledge of construction, design and real estate will prove invaluable when house flipping. You can choose to learn these skills yourself or hire professionals with the said skills.
Next, you need to find funding for your house flipping project. There are many ways to finance your venture, including bank loans and the most feasible bridge loans.
Find and Buy a House
Once you get some funding, you have to find and purchase a home. Find a house that’s distressed, foreclosed or a run-of-the-mill fixer-upper. All these are great options, but it’s a good idea to hire a real estate agent to help you make the right purchase.
Get To Work
Next, it’s time to roll up your sleeves and get to work; gather a group of friends and start making repairs on the house. You don’t have to hire handypersons for minor fixes that you can do on your own. Doing so helps you cut down your house flipping budget, but remember to leave the hard stuff to the pros.
Flip the House
After completing all the necessary repairs, it’s time to sell the house. Keep in mind the more the house stays on the market, the less it’ll sell for. So make sure you get your timing right to make a considerable profit.
Mistakes To Avoid When House Flipping
Now that you know how to flip a house the right way, let’s look at a couple of things you should not do when house flipping. Here are some of the most common house flipping mistakes you should sidestep.
1. Going It Alone
While it’s perfectly alone to want to venture into house flipping alone, not everyone has the necessary skillset and connections to do so successfully. For the best results, consider hiring a real estate agent who’ll let you know the ins and outs of the real estate market.
Also, it’s best to leave major repairs to the professionals even if you’re pinching pennies. Doing it alone will only waste time, money, and resources. This is especially true for repairs that have to do with plumbing, air conditioning, and electrical work.
2. Overdoing the Home Improvement
We understand that you want the home to look the loveliest it’s ever been, but be careful not to overdo it. Don’t use décor, finishes, and materials more upscale than what the neighborhood is used to. That’s because no one will be willing to buy a house at a price higher than the general market, and you’ll suffer a huge loss.
Do your best to improve your home, but make sure you don’t overdo it. A contractor will give invaluable advice on how to improve a house without going overboard.
3. Ignoring the Local Buyer’s Taste
Earlier, we mentioned something about market research and here’ where local buyer’s taste comes in. To flip houses successfully, you need to have a firm idea of what the local house buyers want. This includes everything from the house designs, finishes, and renovations that appeal to local buyers.
If you don’t, your house won’t attract any buyers, and you’ll have to sell it at a loss. If you can’t put your finger on what local house buyers want, it’s best to go neutral.
4. Not Running Your Comps
Just like any real estate investor, you’ll need to run good comps before your flip a house. Make sure you run comps before listing your house for sale and also before buying one. This can help give you a rough idea of what returns you should expect to get from the house flip.
Running comps entails looking at current prices, recent sales and comparing them to the previous peak. Your real estate will really come in handy when running comps. Sites like neighborhood scout have plenty of information on house prices and real estate market trends.
5. Overlooking the Backyard
Even though the trade is known as house flipping, it doesn’t mean you should ignore the backyard. It’s common for most house flippers to focus on the font of the house and completely overlook the backyard. That’s a huge bummer for potential house buyers who fall in love with a house only to be let down by the backyard.
If you want to seal the deal, make sure you also get the backyard while doing the renovations. Remodeling the backyard takes minimal effort but has a great return on investment.
If You’re Flipping Houses, Do It Right
The next time you flip a property, ensure you steer clear from the above house flipping mistakes to make the most profit. House flipping takes a bit of practice, but you should make a good profit in due time. Also, make sure you hire a reputable real estate agent to walk you through the process.
Contact us today if you need financing for your house flipping venture. We can help you chart a successful house flipping career.