Flipping properties is not an easy task, so if you're new to the investment strategy avoid these common mistakes.
1. Incorrect Numbers
When it comes to flipping properties, understanding the numbers is extremely important.
This may seem like an obvious step, but it is where most house flippers go wrong. Many investors are over paying for their home and they cannot appropriately estimate the cost of repairing and upgrades.
Their inability to analyze a deal kills their ability to profit from a house flip.
Where some investors go wrong is that they put some of the nicest amenities such as cabinets, floors, and bathroom fixtures in a property thinking that it will increase the value of the home dramatically.
However what they find is that the market dictates the home value, not all of the extra, fancy amenities within the home.
The bottom line is you don't want to over improve the property, so it is best that you stick to your numbers to not make that mistake.
2. Not Knowing the Market
Knowing the market is just as important in house flipping as it is in traditional, long-term buy and hold investing.
Many house flippers believe they are buying a property that is in a good market, but later find out they did not do enough research on the area.
If you are a house flipper you want to do your due diligence on a market by looking at nearby school districts, crime rates, what type of retail stores and restaurants are in the area. These are a few things that will help you adequately pick a great market for your Fix&Flip.
3. Not Having a Solid Team
Lastly, many house flippers make the mistake of not having a solid team behind them. Most people are not flipping homes as individuals, they have a team that helps and supports them along the way.
One of the most important people or individuals on your team is the contractor.
The ability for the contractor to complete the project within the decided time frame is critical for you to successfully flip a property. When house flippers have bad contractors it usually negatively affects the project.
It is extremely important that you get multiple contractors before you add one to your team and if you are able to find a good contractor please do your best to keep them so that you can use them for future projects.
Another important person on your team is the real estate agent.
Unless you are representing yourself or you are a real estate agent, finding a real estate agent that can sell your home quickly is critical. The longer you keep the house on the market once it is completely rehabbed will be lost dollars eating away at your profits.
You must be equipped with the financial knowledge and ability to analyze Fix&Flip deals, understand how to analyze profitable markets, and put together a solid team that can complete a project quickly.