Flipping homes is one of those things that sounds easy, but in reality, it’s not usually that simple. However, if you’re really committed to being a flipper, there are some good guidelines to follow to make sure that yours isn’t a terrible experience. Here are four mistakes to avoid when you’re going through your very first home-flipping project:
1. Hanging onto the house for too long. Many times, people will get emotionally attached to a house, turning their flipping project into a labor of love. Those people will get so invested in the work that they’ll end up holding onto the home for too long. A key point to remember about flipping homes is that it’s a short-term process—your goal should be to do the repairs and upgrades that you need to do, and then find a way to sell the home for a profit. A long-term flip can very quickly turn into a bad financial decision.
2. Over-renovating the property. Casual home-flippers want their flips to look the way they’ve seen on TV, but too often, they don’t pay attention to the homes that are already in the neighborhood or which projects would bring value to the property in that area. If you over-improve a home, you may end up needing to sell for a certain price in order to recoup your costs, but doing so isn’t necessarily a guarantee. If you don’t sell for that price, you’ll end up losing money on that project.
3. Not having an emergency fund. Especially if you’re flipping an older home, you need to have an emergency fund on hand. Time and time again, I’ve seen flippers run into electrical or plumbing problems they didn’t anticipate, the costs of which will eat into your profits. An emergency fund will ensure that you’re able to tackle those surprise issues and still be able to profit from the sale.
4. Pricing yourself out of the market. If you’ve spent all this time and money into flipping the home, you’ve definitely earned yourself a profit—however, pricing the home too high can put you in the opposite situation. Buyers today are savvy, and most will be aware of whether or not your property is overpriced. In the end, the market will determine what you can sell the property for—not your HGTV-inspired fantasies.
If you have any questions about flipping homes or about real estate in general, don’t hesitate to reach out to me. As real estate professionals, we want you to succeed as best you can.
