When you binge-watch a little too much HGTV, it's easy to think things like, "House flipping looks easy! I should try it!"
Well, maybe you should - we sure won't stop you! - but before you jump into your very first home flip, make sure you know what common mistakes first-time flippers are in danger of making so that you can avoid the same fate.
Not Having the Finances
You'll need finances for the down payment or full cash price, insurance, taxes, utilities, labor, materials, and more.
Buying the Wrong Property
You want a home that’s “just right” — not too expensive, and not in terrible shape. Follow the 70% rule: don’t pay more than 70% of a home’s fixed-up fair-market value. If you think you can get $200,000 for a fixed flip, don’t offer more than $140,000. (Equation: $200,000 x 70% = $140,000)
Failing to Secure the Right Permits
Which permits are you going to need for your upgrades? You don't want to get started only to discover you might need to redo some or all of it.
You may be tempted to flit from project to project so that you can feel like you're accomplishing something. Instead, make a list of things that need to be done, and if you want to feel that sense of accomplishment, plan to spend your morning working on major projects, and your afternoon on little items that help you feel like you've finished at least one thing.
Overestimating What You Can Do Yourself
This is a major investment, and you are probably not qualified to do most of it. For your first flip, hire pros and watch them work so you decide if DIY might be an option — next time.
Not Playing Well With Others
No flipper is an island, and that is especially true for first-time flippers. You'll need to rely on strangers to help you finish the job.
Learn to deal with feedback
Manage your relationships
Enjoy working with others
Running Out of Time
Overestimate how long you'll need to finish the job, especially if you're working by yourself. Leave yourself time to undo and redo some work.
Remodeling According to Your Personal Taste
Many first-time flippers forget that they aren't renovating the house for themselves — they're doing it for a future buyer. Your preferences could hurt the sale.
Neglecting the Little Fixes
Change the light bulbs, oil the hinges, and make sure everything (everything!) works and works well before you call it a day.
Upgrading Too Much
First-time flippers often don't know where to stop with the upgrades and do too much, creating a beautiful house that's over-finished for the neighborhood.
Ignoring the Outside
Have you paid attention to the landscaping? Put in new sod? Added flowerbeds to the garden, or otherwise improved the curb appeal of the home at all?
Listing the House Before It's Finished
If you try to start showing the home before it's actually ready, then all buyers are going to see is a half-finished project.
Counting On the Market to Pull the Price Up
Housing markets, like all markets, are subject to outside forces beyond your control that you cannot predict. If you're counting on the market to grow, and that doesn't happen — what's your Plan B?
Staging Without a Pro
For your first home, do yourself a big favor and budget for a stager from the beginning. A professional stager will tell a story with the home, tying rooms together with color and texture, and helping buyers envision their lives in your flip.
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