House Flippers Beware: Common Mistakes That Will Derail Your Investment Plans
Flipping houses can be a very profitable endeavor, but it can also be risky if you don’t know what you are doing. Even experienced investors run into problems. In order to increase the chances that you will make a profit, avoid the common mistakes that often plague flippers.
Ignoring the Exterior
In the rush to make the inside of the home look great, many flippers completely forget to allocate a portion of their budget to landscaping. Curb appeal is important; potential buyers may never step through the front door if they don’t like what they see on the outside. Therefore, when considering whether to buy a property, evaluate the condition of the exterior. If you can’t fix it up properly, don’t make the investment. And, if you aren’t sure what the best course of action is, speak with a landscaper to determine a plan and a budget.
Spending Too Much
Before you even begin looking at properties, have a firm budget in mind. No matter how much you like the home, do not exceed your budget; you never know when an unexpected expense will arise, raising the cost of your renovations. Keep your emotions out of the purchasing process, and you should be okay.
Not Researching Properly
Most flippers are aware that it is important to consider the location of a home prior to buying it. However, just because you find a Huntington Beach home for sale in a great neighborhood doesn’t mean you should act on it. If the price is very low, there are probably major renovations that need to be completed; you should evaluate whether you can make those changes and still get a return on your investment. Also, take a look at the comparables in the area to determine what you can get for the home. Finally, how many other homes are for sale in the neighborhood? If there is a lot of competition, your house may sit on the market, eating away at your profit.
You can still find a decent property in a less desirable location, however. Avoid real estate that are close to busy highways and train tracks, and look for properties that are close to retail centers. Walking paths are a plus as well.
Taking on Too Much
Many flippers get a rush when they are able to purchase a property at a low price. However, it is important that you still consider how much work needs to be done on the home, regardless of how much (or little!) it costs. In particular, kitchen and bathroom renovations are very costly. Finishing a basement can quickly add up and it is best to avoid homes with foundation problems. If you are considering a property, and you know it will need work, speak to your Laguna Hills contractor first to get an idea of what the renovations will cost you. Make your decision after you have a realistic picture of the situation.
It is possible to make a great deal of money flipping houses. However, you can’t go into the situation unprepared. Use the information above as a guide toward helping you make good investment decisions.
Americal Construction Management Group
26081 Merit Cir Ste 114
Laguna Hills, CA 92653