Since the early 2000’s, house flipping has a become a lucrative and trendy way to turn a profit. It’s no wonder why so many people are looking to enter this business when the average profit off a flip is around $60,000. However, where there are big profits there are even bigger risks. Read below for some of the top mistakes people looking to get into this business make.
Real estate is an expensive business to get into. It requires a lot of cash up front to buy the home and cover remodeling expenses. Keep in mind that whatever you spend has to be added to what you sell the house for in order to just break even. Easier said than done. Keep in mind if you can buy the home without having the cash on hand, but that requires financing and paying interest. All while also paying any holding costs for the property during the remodel. That’s why it is best to flip the home as soon as possible.
Flipping a home takes a lot of care, time and attention. It takes months to find the right home to buy, then remodel and then to find a buyer. Don’t forget to factor in the time for inspections and correcting anything that needs to be fixed. If home doesn’t sell for much to begin with you could be making closer to the salary you were making at your desk job beforehand.
It is best to enter this line of business if you are skilled at the tasks you will be doing. You will be buying and selling homes so many house flippers are real estate agents. You will need to remodel the home and do some professional carpentry, woodwork or plumbing so many house flippers are skilled in these industries. If you have to pay professionals to do all of the work, rather than being able to do it yourself, you will be spending a large chunk of your profit.
Professional house flippers take their time finding the right home to buy, do the remodel work themselves or rely on contractors they know and have worked with before, and sell the home themselves. Newbies will buy the first home they find and hire several different people to fix it up and then use a realtor to sell it. Take a guess at which person takes home a larger profit margin.
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