When thinking about making a big investment, house flipping could seem like a great way to bring some extra funds into your bank account. After all, what could be easier than buying a property for low and reselling it for high, right? See below a list of common mistakes that are often made when taking on the project of house flipping, and learn how to avoid them at all costs to make the process smooth and the outcome profitable.
Underestimation of expenses
To start, it’s especially important to not go over your budget at the very beginning. If your plan is to sell the house after renovations, the selling price should include cost of acquisition, cost of renovations, cost of holding the property, and the sweet part – your profit. Carefully map out a business plan with all expenses included, so there will be no big surprises when it comes to your budget.
Skipping the inspection of a house
A couple cracks in the foundation, a leaky ceiling, and mold on the walls could be easy fixes or major problems down the road. Before purchasing, be sure to get your prospective house fully inspected. You will get more on return if you know which renovations to make and which to skip. Also, do not undervalue the importance of the kitchen in the house. Potential buyers are known to go straight for the kitchen when looking to buy. This room can also be easily customized which will attract future buyers even more.
Not having enough time
Flipping a house is a time consuming process, make sure you are able to dedicate enough time for it. While house flipping could be a fun hobby for you, understand that this is also a full-time job. A couple hours over the weekend won’t get you very far, so plan out weekly schedules to help you stay on task.
Treating the house as if it’s your own
We all have different tastes when it comes to the decoration of a home. Keep in mind that you want to sell this house to other individuals. No matter how wonderful fuchsia color walls, metal kitchen cabinets, and a mermaid style bathtub sounds to you, will easily narrow the circle of potential buyers. Go for neutral colors, textures, paints, and materials that would be appealing to almost any taste.
Like any other business, flipping a house can be challenging, but it is worth the effort if carefully planned out. Moreover, it is a great experience of managing money, people, and time. Be aware of the struggles, take the right moves, and you will succeed. Today’s housing market is changing fast now that we are well into the new year. To see today’s mortgage rates, click here!