You’ve seen it on TV — buy a house on the cheap, fix it up, sell it for a profit and then bask in your newfound pile of money Scrooge McDuck-style. Rinse and repeat. Finally, you’ve found a way to make a lot of money and be creative without having to work a desk job. What could go wrong? As fun and glamorous as house flipping can appear on TV, it’s not all picking out backsplashes and paint colors. Most of the hard work starts before you even step into a house, and as with any investment, there’s a considerable level of risk you’ll have to take on, which is typically greater for newcomers. That said, there are plenty of people who have flipped and flopped before you, so take advantage of the resources and information out there to avoid similar mistakes, some of which are so costly they can sink your house flipping business in no time at all. Here are three of the most common mist akes first-time flippers make:
Beware of sabotaging your own financing in the world of fix and flip loans . Money mistakes are easy for inexperienced flippers to make, but borrowing money is a necessity for most people so it behooves you to get it right the first time around. Make sure you avoid these financing mistakes:
Similar to financing, both over and underestimating how much time you need to renovate a house can be a deal killer. If you rush through a flip, sloppy mistakes will cost you more time and money when a building inspector has you redo work you thought was already done. On the other hand, if you dillydally, your expenses will add up. Interest on financing, payment to contractors and your personal time spent dealing with the flip (instead of earning other income) will all amount to wasted dollars. Manage your time in just as much detail as you manage your budget. Anything less could result in a flop, which won’t bode well when looking for financing or investors for your next flip. Related: How to Write a House Flipping Business Plan
Successfully flipping a house takes many skills, including everything from accounting and construction to design and marketing. No matter how talented you are, you can’t do it all — and don’t let your ego tell you otherwise. Even with your fair share talent and skills, hiring specialized talent will provide major help along the way. There’s simply not enough time to do it all yourself, even if you know you’re capable. Plus, the longer you try to micromanage, the longer you'll hold you back from expanding your business .
House flipping can be a lucrative endeavor. If done wrong, however, it can be an expensive mess. It’s up to you to plan ahead, stay nimble and try to anticipate problems so you can fix them before they sink your house flipping business for good. More From Seek
Business Loan Resources
Photo credit: Breadmaker/Shutterstock.com