Fueled by popular television personalities like Chip and Joanna Gaines, the practice of flipping homes has been on a steady rise for the past two decades. Real estate investors who have learned the art of flipping a home find this practice to be thrilling, satisfying, and lucrative. Investors and general contractors who are not as familiar with the dos and don’ts of house flipping tend to run into multiple obstacles and struggles, suffering setbacks and often financial hamperings along the way. Constantly encountering these costly pitfalls can put a damper on this otherwise engaging practice, so it’s good to know the most common house flipping mistakes to avoid the flipping experience being ruined. So what are some of these all-too-common errors made in flipping homes?
Insufficient Time
Gutting a house from floor to ceiling and installing outdoor recreation areas and landscaping is a time-consuming undertaking. While a timetable can be created based on the acquisition of required permits, a gathering of necessary supplies, any demolition work, as well as addressing issues that are hard to detect until some of the preparation has had a chance to begin, these time assessments are most likely going to need alterations. Mold concerns, as well as questionable plumbing and wiring in older homes, are a very common setback. These problems can slow progress and result in increasing frustrations when uncovered. Beyond that, there needs to be time for the home to be inspected by qualified experts in multiple fields (plumbing, electrical, building, etc.) whose availability is hardly ever immediate and whose findings may result in additional repairs. Another consideration is the time it would take to resell the flipped house, depending on its location.
Lacking Enough Skills
When someone with ample experience flips a house (general contractors, plumbers, carpenters, etc.), they can get multiple parts of the process done independently without needing to call in help. When there is no need to pay for and wait on assistance with several parts of the home flipping venture, money and time are both saved, yielding faster turnarounds and healthier profit margins.
Not Enough Knowledge
One of the pivotal aspects of flipping a home is choosing the right location to take on a project, and that necessitates careful study. Many areas, especially in major cities like Houston, are gentrifying at breakneck speed, but complying with applicable tax and zoning regulations, as well as obtaining strict permits in certain areas, can be prohibitively expensive. A lot of issues can come to a head when someone who is not knowledgeable enough in house flipping fails to address every aspect of the process, turning even an amazing deal on a foreclosed property into work infused debacle.
Insufficient Funds
A house flipping project tends to be costly regardless of one’s expertise level in practice. Anyone engaging in it would need the funds to buy the property in question, to employ builders, obtain supplies and licenses, and cope with any problems that occur, including structural alterations and previously unknown hidden damage. Depending on the financial situation, a loan will be needed to do the work, and loans entail the additional expense of interest. This isn't to say it can't be done, of course, but doing a full financial evaluation of the project before getting started is pivotal.
Lack Of Patience
Breaking into the house flipping business without ample patience and willingness to do some preliminary legwork and research is a surefire way to fail. Lack of willingness to perform due diligence on the property ahead of time will result in a real estate investor that is unaware of many potential issues that lie ahead, increasing complications and cost of the project down the line. Taking the time to select the most professional and skilled general contractor available is also essential to the success of the project and will help to mitigate the chances of the project stalling or needing to be redone. Attempting to market the finished project without the help of a licensed realtor can be more trouble than it's worth too. Flipping houses can be a lucrative venture if time is taken to schedule, prepare, and study the process.
Conclusion
Flipping houses can end up being a lucrative, enjoyable, and satisfying experience if most mistakes can be avoided along the way. There is a learning curve for everyone, as there really isn’t anyone who knows everything. The key is to take the time to adequately prepare with research, getting in touch with the right people, and building a team of expert contractors with a good reputation and sufficient skills. It’s important to consider that these ventures are not quick turnarounds, nor are they inexpensive. Having secure funding, ample patience, and being willing to learn from any pitfalls encountered can only help to make the house flipping project and any subsequent ones a success.
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