With allure of making a comfortable, even lucrative living buying broken down homes and dressing them up is a dream come true for many and an even harder reality than it looks for most who end up making costly mistakes.
I work with many speculative builders in the Toronto market who have jumped into the flipping market with both feet only to realize that when they get to the stage of selling their refurbished home they've run into problems that staging may alleviate but not completely fix. See my top 5 costly mistakes to avoid when flipping homes.
- When buying a home to flip be sure to get a home inspection before you sign on the dotted line. Avoid the pitfalls many new builders face when they become too focussed on finding the cheapest initial cost of buying a fix-me-upper. If you're new to flipping and have some handyman skills be sure to still consider all that needs to be done in order to bring the property to market as this can be a very costly life lesson. If you need to hire experts and other professionals to bring your property from a pig skin to a silk purse you may have to invest more than you expected.
- Create a floor plan in advance and consider how you will place the furniture before you begin to tear down that wall. The benefit of working with an interior designer before you start construction is you will have a cohesive goal oriented plan of action before you start. Although you are thinking you want to save on costs and do-it-yourself, an interior designer can actually save you thousands of dollars because they will create a design that is livable. One of the biggest challenges I see many builders face is when they come to market and the rooms are too small or have an irregular shape and buyers are left wondering how they are going to accommodate furniture. Oops!
- Don't get caught up in attractive yet very expensive materials and finishes if the neighbourhood doesn't call for it. I realize you want to do a good job and you will want referrals and repeat business but if you are decorating the home with all top of the line finishes and your home is located in the lower to middle socio-economic bracket it is unlikely you are going to make a profit on this home.
- Always be considerate of the neighbours. As much as the neighbouring homes would like to see this eyesore transformed, at what cost? If you are sloppy and leave screws and nails all over the road and are not cleaning up after yourself each day, the neighbours who are getting flat tires will become sick of your lack of consideration faster than you can finish. If you want all your permits to be approved and do not want angry neighbours calling the city and complaining wihich will stall your ability to finish the job and ultimately increase your carrying costs always, show a little good will towards the neighbours.
- Finish the details. Although you may be in a rush to get the property on the market if you're not finished, you're not finished. A buyer's first impression is critical, the last thing you want people thinking is you've done a sloppy job and the home you've apparently flipped is still a run-down flipper.