Television shows have made the idea of making your fortune flipping houses look easy. You find a house in need of some repair, get a mortgage, fix it up and then sell it off at a huge profit all in an hour. The reality is very different. While you can make a lot of money flipping houses it is not easy as they make it look. New investors and would be house flippers need to take heed and don’t make some of the more common mistakes. Here are 5 mistakes you need to avoid while flipping houses.
Not Enough Cash
Real estate doesn’t come cheap anywhere and while for the most part you can use other people’s money to fund your deal you also need to make sure that you have enough of it. There are plenty of strategies for buying houses with no money down, the reality is that is not so easy. First you’re going to need the money to buy property, cash to fix it up and the carrying costs while you have the property.
Not Enough Time
On TV they flip a house in an hour, in the real world it could take months. It will take time to find and buy the right property, it takes weeks to get it fixed and you will be waiting for the inspectors to come and check the progress. It could sit on the market for months after all is said and done.
Lack of Skills
You don’t learn carpentry or how to hang drywall overnight. Often tradespeople get into flipping houses because they have the skills and connections to get the work done. When it comes to flipping houses you make your money from sweat equity, if you have never picked up a hammer in your life then the amount of money you make will be far less.
Picking the Wrong Property
If you want to make money then you’re going to need to find the right property. It needs to be at the right price, in a good neighborhood. You need to know which upgrades will affect the selling price and you need to understand the market. You can’t grab any old house and expect to make a buck. People who do this for a living put a lot of research into it and know when to cut their losses. Here is some help in finding the right property.
You Need Patience
Take your time and wait for the right property. Don’t hire the first contractor that gives you a quote. Take the time to build your network that includes contractors, realtors and investors. Buying and selling houses is a long game it isn’t day trading and sometimes the profit margins can be pretty thin. Flipping is harder than you think.