Falling in love with the property like you’re going to live there
A true flipper can never fall in love with a flip property. Unlike your own home where you will raise a family, make memories, and suit your needs — flips must appeal to the widest possible market. This means choosing designs and colors that appeal to most, not to you.
When you are designing your flip, take yourself out of it. You may love blues and greens, but stick to whites and neutrals when you pick paint colors. Research current design trends, visit open houses of new construction, and talk with local real estate agents to find out what’s selling and what’s not. If you don’t create an attractive property with mass appeal, your flip may linger on the market costing you money every passing day.
Remember to not get attached to the house, because you’re not going to live there.
Not getting a home inspection
This is the worst! Even if you plan on making major changes to the house, you still need an inspection. House flipping usually involves making cosmetic changes and maybe opening a wall or remodeling a bathroom. It’s a makeover but not a complete rebuild. So, you need to get it checked out before you buy and to know exactly what you are buying. Not getting a home inspection can cause a great financial loss when a large unexpected repair arises…and it usually does.
Inspections can turn up all kinds of problems. Some things are minor and won’t matter if you’re planning to rip out and replace those items. Others things like a cracked foundation or complete roof replacement can cost you greatly – and cost you a large amount of your profits.
At the very least, an inspection can identify problems you can use to negotiate down the price. Every dollar counts toward your bottom line.
Overestimating your skills
Every dollar saved is a dollar earned when you flip a house. However, all too often flippers think they’re better carpenters, plumbers, and electricians than they really are. This ends up being a major drain of time and money because you end up redoing work.
Consult competent workers and/or contractors before undertaking any major project and make sure to ask for an estimate in writing. This will help you estimate correctly what it will cost to correct the issues and make the house attractive to buyers.
Underestimating total costs
Inexperienced flippers often add the purchase price to renovation costs and figure the expense of materials only and forget the cost of equipment like tile saws, table saws, etc.
Other costs rookies do not take into account are state and federal taxes on profits, real estate costs, inspections, and a bunch of other fees that show up at closing when you buy, and again when you sell your property. Learn what these costs will be ahead of time to truly understand the total cost of your project. Don’t forget permit fees too.
“For Sale” too soon
Some flippers are tempted to put up a “For Sale” sign too soon before the renovations are complete, hoping a buyer will be able to envision how great the house will ultimately look. That’s a big NO-NO! Most people do not have that kind of vision and can’t really see how things will look once they’re done. Don’t list the project until it’s move-in ready. It will save time and make you more money in the long run.