Thanks to the explosion of T.V. shows featuring ambitious real estate investors quickly renovating run down homes for a pretty profit, it seems that everyone these days is trying their hand at house flipping. However, as is true for most things, it’s not as easy as it looks on television. Starting without knowing the possible pitfalls of house flipping can leave you with a mess on your hands and often that mess is a significant financial one. Taking stock of these helpful tips can help save you from falling victim to some very common mistakes made by new flippers:
Buying More Than One Property at a Time
So you’ve decided to enter into the wild and potentially rewarding world of house flipping and you’re getting excited about all the houses with great potential you’ve seen. Suddenly it occurs to you that you could make even more money than you anticipated if you bought two houses at a really great price and flipped them quickly. Why not double your money, right? Not so fast! You’ve just fallen prey to every newbie flipper’s number one pitfall: biting off more than you can chew. Avoid this at all costs, as it has ended many a flipping career before it even began. Always begin with one home and stick with one home before you buy another one. Do this a few times to make sure you’ve got the hang of flipping and only then should you consider flipping more than one property at a time. Start slow and it will pay off in the end.
Buying Sight Unseen
Now that people know you’re a flipper, they keep telling you about all kinds of great house deals they’ve seen. In fact, you’ve been hearing a lot about hot deals to be had in neighboring towns or even in neighboring states; the catch, people tell you, is that you have to act fast because these super-lucrative properties get snapped up as soon as they hit the market. But you are in the middle of a flip and don’t have time and/or money to travel to view other houses. No problem, these people assure you, everyone is buying these homes sight unseen and making huge money. You can’t lose, they say. Do yourself a favor and don’t listen to these people who might be looking to make you a Jack to their magic beans. Would you buy a car that costs hundreds of thousands of dollars without driving it, even though you know it’s going to require an overhaul, just because someone told you it’s a great deal? Of course not! Why, then, would you do that with a house? The only good deal is a deal you’ve properly and thoroughly assessed; learn that lesson first and you’ll save yourself a ton of grief and money.
Neglecting Curb Appeal
You’ve knocked out walls to make the house open concept, torn up floors and laid hardwood or gleaming laminate, added cozy fireplaces, updated whole bathrooms and painted every single wall in the house a lovely neutral tone. You stand back and admire your handiwork: this house is beautiful! However, when you show the house, people don’t say much about the interior but they do comment on the old siding, the patchy lawn and bare front flower beds. To your horror, you learn that neglecting curb appeal has put your investment at a significant disadvantage and, worse, you’re out of money. It’s very common for flippers to lose themselves in the Cinderella-style transformation of the interior of a home and lose sight completely of the yard. This problem becomes a nightmare when they discover that landscaping and exterior finishes can be hugely expensive. Do yourself a favor and save a generous chunk of your flipping budget for the home’s exterior and you’ll have a house that anyone would be proud to call home.
Don’t be a house flipping cautionary tale. Do your research and plan properly, and you’ll be seeing profits in no time!
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