Those TV shows have made house flipping so easy—you buy a house, wreak it with a sledgehammer, beautify it and voila! You can now sell it on the market and make a huge profit. In more ways than one, these TV shows make the process seem so simple and fun, and essentially a cash cow waiting to happen. There’s more to it than meets the eye, however, especially if you’re dealing with a first-time fix and flip loan.
Flipping is a real estate investment strategy, where an investor purchases a property with the sole purpose of selling it, and never for use. They could buy the world’s ugliest and dingiest house, turn it into something marketable and sell it for more than what it’s originally valued.
Unfortunately, making it big in the real estate market doesn’t just mean creating the most beautiful house for sale. It entails strategy and rules—even the best in the industry fall into the trap of overlooking the basics.
Fix and Flip Mistakes
Before you flip that house, make sure to avoid these mistakes:
- Saying “yes” to the big challenges. Contrary to popular belief, house flipping entails more than just sledgehammers, goggles, and buckets of paint. Flipping shows on TV have glossed out the actual risks involved in the process, which is a lot—you’ll end up losing more than what you bargained for. Before seeking out a big property to flip, ask yourself—is this worth it? If you’re new to the scene, the most logical answer would perhaps be it’s not worth it. At least not yet. A much wiser approach would be to flip a small home, even if it is less profitable than the huge property. By doing so, you allow yourself to learn the ropes of flipping intimately. You’ll get a good grasp of all the processes, which includes building a trustworthy team and a band of suppliers for your projects.
- Accepting overpriced materials. The end goal of house flipping is to essentially gain profit. If you use expensive materials, you’re unlikely to see income. Starting out on the scene will leave you with a limited network, but you’ll eventually learn the tips and tricks of saving money on materials. You can go to the local distributor for wholesale prices, as well as purchase clearance items that still offer much value. More importantly, however, it’s best to not get attached to your first options. Don’t accept the first tiles you see, or the beams you thought were beautiful. Remember: you won’t be living in the home. While getting quality materials is important, don’t invest too much!
- Overthinking and overdoing. One of the biggest mistakes first-time flippers make is that they invest too much. The media has painted flipping as something fun and exciting to do, a kind of poetic way of recreating the trope of making something ugly beautiful once again. While the idea may indeed be exciting, newbies end up improving the home too much. House flipping as a business is different from house-flipping as a hobby. Your main goal is to create a product that is marketable, and that entails understanding the needs and wants of the customers. To avoid this mistake, it’s best to scour other properties and see what is trending. Are marble floors better than colored ceramics tiles? Should the kitchen be finished with metallic pieces and granite counter tops, or would that be too much? Stop listening to what you want—make the property theirs, not yours.
The Bottom Line On Fix and Flips
Being a new house flipping investor can be exciting, especially since it has the prospect of earning more. Unfortunately, this can also blind people into thinking that some decisions are better than others when in fact, they’re detrimental to the entire progress.
Mistakes will still be made, but the important thing is to continuously learn and evolve. If the next flipping project is met with fewer mistakes and so forth, you’ll be on your way to successful flipping projects!
If you’re on the hunt for services offering a fix and flip loan in Los Angeles, we’re the place to call! As the #1 mortgage lender in the state, we’ll help make your flipping dreams come true.
Let’s talk business—contact us at (818) 601-2231 today!