7 Sure Ways To Ensure Your Next House Flip Is An Epic Fail

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Ever since house flipping became a “thing”, thanks to reality television, many people have come out to try their luck with it.

Many of them have the desire to do it, but it takes a whole lot more than that to succeed in house flipping.

You first need to understand the hard realities of the business as they can be cruel if you go about it without much of a plan.

And aside form thinking negatively and thinking that you cannot do it at all, the second worst thing you can do is thinking with your heart.

When you’re buying a house you’re going to live in, that’s a whole different story. But with a house you’re going to fix and flip, you need to cast emotion aside and think with your brain.

So whether you’re on your first flip or your fiftieth flip, as much as possible to avoid these 7 mistakes.

1. Lusting After Property

This often happens when you find what appears to be the perfect house. It’s the perfect flip you say to yourself.

Unfortunately, the seller may not be willing to negotiate down to your maximum allowable offer but you figure the house is worth it anyway. You even agree to pay more than 70% of the ARV.

Big mistake.

Never ever buy property that breaks the house flipping rules. It doesn’t matter whether the house is located in a great area or has some unique selling points. Don’t purchase property with your heart, use your brain.

2. Doing Everything Yourself

Many house flippers imagine walking into a dilapidated piece of property, sweeping away the dust, adding a new coat of paint and selling it in under 30 days. Good as new.

Unfortunately it’s never that easy….those ar ethe houses that the retial sector buys.

To get maximum value, you need to buy ugly and then rehab pretty.

The problem is rehabbing a house is not an easy process and even the most experienced contractors will tell you it’s impossible to do it alone. You need to have experience in plumbing, electrical work, interior design, carpentry, masonry, not to mention some engineering and architectural skills to boot.

Chances are you dont have all those…

It would be really unfortunate if you found out three months down the line that you weren’t the septic expert that you thought you were.

Don’t try to do it all yourself. Hire a great team and factor those numbers into the equation. If you do it all by yourself, you’ll end up eating yourself alive and eating up all your profits at the same time.

3. Spending Too Much Money

You might be one of those house flippers who wants the best of everything in your new flip.

Or on the flip side (no pun intended I assure you), you may be one of those who wants to cheap and put in the shoddiest of everything.

In my experience, it’s the first group I see more of these days.

Unless you absolutely need to, there’s no point in spending over and beyond your budget. There’s a limit as to what you should spend. For instance, it doesn’t make sense to spend money on expensive improvements if a house is located in a lower-income neighborhood.

You likely won’t get a return on investment. Consider the neighborhood and ask your realtor what they think. Notice what other houses have in the area and blend in. You don’t want to be the most expensive house on the block so don’t overdo it unless you’re assured that you’ll get your money back.

4. Throwing A Tantrum When Things Go Wrong

Things sometimes go wrong in house flipping. So don’t become one of those guys who loses it when things go wrong.

I have news for you: tons of things will go wrong…you just have to be able to deal with it and move on to solutions.

Problems are the nature of the house flip business.

However, you should let your emotions guide how you react to unforeseen problems. Anything can go wrong during rehabbing, buying or selling. In some cases, it might even take you longer than you anticipated to find a house you can flip. It happens.

So rather than get upset, keep calm, keep working and wait until you find the right property.

5. Being Greedy

I get it.

You want to get into this business to make money.

That does not mean you should become greedy though.

When you sell, you should never price the house so its above market, you’ll simply lose the interest of many potential customers.

To avoid  re-pricing the property,  listen to your listing broker and look at the comps he or she presents to you and make sure the comps are really similar to your new house.

Then for a fast sale, price the house slightly below the market so you can sell it fast, minimize your soft costs and move on to your next flip.

6. Thinking House Flipping Is A Get Rich Quick Scheme

If you’ve been reading this blog long enough, you probably realize that house flipping is NOT a get rich quick scheme.

Don’t be deluded and think that flipping houses is a get rich-quick-scheme. If you do think its this way, do some more reading here.

House flipping takes time and a lot of hard work. If at all there was a shortcut or some hidden secret that can make you a millionaire overnight, everyone would take advantage of it.

The only way you can make money in real estate is to buy right and be smart. Don’t fear failure, because you will fail. You just have to get right back up and start swinging again.

Put in the time, the effort and the 10,000 hours. Get to work.

7. Being A Slacker

No offense, but one problem many house flipping beginners face is being a slacker.

They spend a lot of time doing research and learning all there is to learn about house flipping…but they never actually DO anything.

They may say “I have no money” or “I don’t have the know how” or “I’ve never done it before”.

All excuses.

Everyone who ever did anything in their life at one point in time they had never done it. Think about it.

Everything you now know how to do really well, there was at one point in time in your life, a time when you didn’t know how to do it!

Right now, I’m typing on a laptop…when I was seventeen, I couldn’t type. 

Three years ago I barely knew what a “blog” even was…now I write all the time here and all over the Internet.

And six years ago…I had NEVER flipped a house. This year, I’ll flip at least two dozen…if not more. 

You might learn a lot of theory from your couch…but you learn even more when you get out there and start flipping houses.

Don’t be a slacker…just do it!

 

If you’ve come this far, please leave a comment below! What you think of these 7 ways that can make your house flipping project an epic fail? What did I miss? Agree? Disagree? Please leave a comment, I’d love to know what you think!

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About Author

Michael LaCava is a full time real estate investor, house flipping coach and the President of Hold Em Realty located in Wareham, MA. He runs the website House Flipping School to teach new real estate investors how to flip houses and is the author of "How to Flip a House in 5 Simple Steps".

13 Comments

  1. I have done a flip and many apartment renovations myself. You have to be motivated, and understand your limitations. Know where to get kitchen cabinets cheap, like RTA cabinets. Get discounts on paint. Get all rebates you can. Understand that a renter, or even most home buyers, will not pay a premium for most items.

  2. Great post Michael and thanks for your insight Eric. Can you guys list some of your favorite places to shop for cheap rehab materials like paints, floors, sheetrock, blinds etc?

    • Paint, Sherwin Williams. i get about a 50% discount off retail with my company. HD you can get 25% off with Paint Rewards.

      Floors, Sam’s club for laminate

      Most other items, Menards. Here in the midwest. HD and Lowes would be OK too. get a Lowes card for a 5% off. I am a disabled Vet, so I get 10% off.

      Appliances – Lowes. Free delivery, haul away. Buy 10% off coupons on eBay and get 10% off sale prices (or be a vet).

      Cabinets – RTA Cabinet Store. Get 10% off the web site prices. They even have my kitchen in their web advertisements for Oak Kitchen cabinets.

      I use stock laminate counter tops, 6″ stainless steel sinks, etc. but my places look like a $1M.

    • Thanks Samrus- Like Eric I used to shop many places to get good deals. We have a discount at Sherwin Williams, Home depot, Lowes…. However as my business grew we shifted to hiring a GC to manage our rehabs and now he shops for good pricing. This model allows me to do more rehabs so even if I pay a little more it is ok because I will do more business.

    • Yes that is true Jimmie and there isn’t a day that goes by where where I don’t think about ways of improving our business. I have a weekly meeting with my business partner and staff and we talk about our systems & experience during the week and come out with something to improve upon weekly. Even if it is the smallest of things it is still and improvement in operations.
      How is the market in Jackonsville these days?

  3. Number 3 is often caused by fixing the ugliest and worst things, so then they look better. Then the not quite as bad things are the worst and stand out, so you fix them, then something else needs improving … and not only are you going beyond the original scope of work, but the time stretches out and holding costs go up. Know where to draw the line.

    Great post!

    • This is so True Walt. I have a lot of experience in this and it is tough sometimes to draw the line because even the little costs add up so you just have to keep getting better at this and improving ways to meet your budget right on. But like you said the little things matter and the details must be payed attention to.

  4. As always a great article with lots of great points.
    These are points beginners and seasoned vets need to keep in mind.

    #1 always gets me (not that I have the issue but don’t understand why others do).
    People it is just another house. Unless after seeing it you decide that you actually want to live in it then NOTHING about it that doesn’t actually raise the ARV makes it worth any more to you to buy it.

    • So true Shaun. I don’t get emotionally involved at all. Other than when I first started you get emotional about your first few deals I can see how newbies get caught up and over pay however I didn’t make that mistake. It’s just #’s. They either work or they don’t. When you have to try to hard to make them work that should be a red flag.

      • Yeah never get attached, all numbers.
        Once had an agent call me after I put in an offer trying to give me a bunch of reasons why the place was a good buy closer to the list.
        He got frustrated and said something to the effect of “Do you want to buy this place or not?” and I said “Not really”, and he wasn’t sure how to respond to that. :)

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