There is a lot to be gained financially if you step into the world of house-flipping. However, contrary to what a lot of popular TV shows lead you to believe, flipping a house is not as easy as it looks. The TV companies have a budget you likely don’t, with experience you don’t and have gone through painstaking edits to make the process as simple and consumable as possible in the 23-minute window that they have your attention.
Not to say that it isn’t something worth learning, however. One of the best ways of learning how to do something correctly, is by figuring out what you shouldn’t be doing. Below is a list of some common mistakes that people make when they try to flip a home.
Not Financially Ready
Unfortunately, real estate isn’t one of those ventures that you can just “dip your toes” into. There are all kinds of costs and hidden fees and while low/no money down loans do exist, finding them from a trustworthy vendor is an intensely difficult process. If the plan is to buy a fixer-upper and sell it for profit, you have to take into consideration the cost of acquiring the house, holding the property and the cost of all the remodeling work.
It’s important to note that while the interest on your loan is tax deductible, it is not going to be a 100 percent deduction.
Try to Renovate without a Contractor
It might seem like a great way to save a few thousand dollars in labor costs by doing all the renovations yourself. If you are a carpenter or plumber, you might actually be skilled enough to take on that extra cost. However, if you are just a regular person trying to pinch a few pennies, you might find yourself in trouble. These vocational professionals often flip houses in their free time because they have the knowledge, skills and experience to find the right home that they can flip themselves.
If you have the know-how to lay carpet, hang drywall or install a kitchen sink, you’re qualified to fix a home up for yourself. If you aren’t, you should leave that work to the professionals. You’ll end up spending way more time and money learning how to do the repairs than it would cost you to hire a contractor.
Underestimating How Long It Will Take
Almost nobody can buy a house, fix it up and then sell it in a matter of weeks. Flipping a home is a lengthy process. Simply finding the right house to buy in the first place can take months. Then comes the time it takes to renovate. It will also need to be inspected to make sure it’s compliant with your local coding laws and the extra time and money that will go into renovating if the house isn’t up to code.
That isn’t even taking into consideration the time you’ll have to invest in selling the property. Investing in real estate management team is going to help this process along, but it is just another step on the long road to collecting the check.
Just because you’ve seen professionals on TV make a ton of money flipping houses, doesn’t mean that it will be that simple for you. However, that also doesn’t mean that it isn’t a worthy avenue for money-making. Just make sure to take your time, do your research and you’ll be on your way to flipping your first home!