Property flipping is not for everyone. I know, I know it's so tempting to get into the flip mode when anyone you talk too that's been successful will tell you it's a good way to make quick money. However, be cautious because there are some people who believe money earned quickly can disappear just as fast. If making quick money is the only driving factor of flipping properties I suggest you think long and hard before you dive in.
Successful flippers know the market before they enter it. Market's that are appreciating, and appreciating quickly are good but, those that are stagnant or even still depreciating can land you in a lot of trouble. You have to know the market you are looking to get into prior to even looking at any potential flips. While the right decision can create financial euphoria the wrong decision can cause financial despair.
I encourage you to talk to flippers that have been successful but, for this article let's focus on the top 5 mistakes to avoid.
Personal Funds- Using your own money doesn't guarantee you a profit. Apply for financing for the property you plan on flipping.
No Cash- You need to have a cushion to be able to pay the mortgage, HOA dues, etc. during the renovation/sale process. Don't spend all your cash on the renovations/repairs and end up unable to pay the mortgage on the house you want to flip.
Time- The best profits are earned when the house that's being flipped is sold in the shortest time possible. The longer you hold onto it the more costs you accumulate.
Inspection- Hire a licensed home inspector before buying the house you want to flip. He/she can give the house a "physical" and tell you any issues that are present. Without it you are going in blind and can end up spending far more than you budgeted for.
Renovation Costs-If you're unsure about the cost for the repairs that need to be done, have someone you know estimate the costs for you, preferably a licensed contractor.
Flipping is strategic, not guess work; it takes proper planning, execution and timing.
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