Common mistakes made when flipping a house
Busting a house for profit is a dream for many in the real estate world. Buying a dilapidated property, fixing it up, and then selling it for a huge profit is exactly how we’d ALL like to do it! However, there are some common mistakes made when changing ownership:
Not Enough Money – Acquiring the right property for the right amount of money is often the first step people looking to invest will take. A common mistake and often the biggest mistake is the one related to money. It is important to make sure you have the right budget. Being fully aware of all hidden costs, fees, taxes, maintenance costs, and interest will help keep you on the right track. Although these will slightly affect your earnings, they are all necessary expenses.
A good rehab budget and schedule will help keep you on track for superior profits. Materials, labor costs, and time must ALL be accounted for through receipts and records. Managing your rehab correctly is imperative to a successful turnaround.
Not Enough Time – As mentioned, this is the KEY to managing your rehab the right way. Don’t make the mistake of mismanaging time or being unrealistic about your timeline. It is important to keep to a strict schedule; however, don’t try to do things too fast and compromise the quality of your workmanship or that of your contractors. Have a work schedule detailing each activity needed to complete the job. Consider interdependent jobs, that is, one job that must be completed before another can start. Also make sure you have plenty of lead time to place your material orders.
Lack of preparation – Before the property closes (when you are buying), you should have price estimates ready to go. On top of this, have your contractors lined up and time on location to order materials.
Not Enough Skills: Another common mistake is trying to keep expenses down by doing the work yourself instead of hiring a subcontractor. When considering this, keep in mind not only the actual cost difference, but also the time it will take. Some jobs can be done almost as cheaply by a sub and the job can be completed in a fraction of the time. This frees you up to do another task and gets the job done sooner. Sometimes this can be the difference between going on the market during peak sales season or not.
Get the price right from the start – When putting your home on the market, the best thing to do is price it right. Giving yourself too much negotiation space will reduce the number of buyers who see the house. Again, the goal is to get the best price quickly. You will get the best price in the first few weeks and the highest interest too. Don’t let ownership become stale.
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