3 Common Pitfalls to Avoid During Your Rehab Projects
By now, you know how rewarding and beneficial flipping homes can be—when you do it right, you stand to make a significant amount of money. With all the positives that can come from a successful home rehab, there are countless mistakes and pitfalls to avoid along your flipping journey if you want to achieve success. Here are three of the most common problems to avoid to set you up for greater success.
The Benefits of a Home Rehab Done Right
Homes in established neighborhoods have so much to offer, including mature trees and vegetation, typically larger lots, a variety of home styles, and less uniformity than the homes in brand new developments. Unfortunately, over time, many of these homes fall into disrepair, becoming undesirable and oftentimes unsightly. The ability to take an older home and restore it not only to its original glory, but make it desirable for today’s buyers, is an invaluable talent that not everyone possesses.
Purchasing a seemingly hopeless house for just a fraction of what other homes are selling for in a neighborhood means, when done right, you have the potential to make a significant profit when you rehab and sell that home. Buyers tend to flock to flipped homes because they know purchasing one is essentially the same as purchasing a new home, only with the benefits of the established older neighborhood. Not to mention, choosing to rehab a home is essentially like recycling the property, saving resources, helping revitalize the neighborhood, and turning something undesirable into something beautiful.
Of course, home rehab is not without its challenges. Here are 3 common pitfalls you should avoid.
1. You Don’t Consider the Buyer
When flipping a home, it’s easy to get caught up in designing the home of your dreams, rather than the home that will appeal to the most potential buyers. Avoid making really specific upgrades and choices, and instead keep things neutral. While turquoise kitchen cabinets may be something that appeals to your own personal style, it’s unlikely this design choice will appeal to most buyers. Keep things neutral but attractive—making really specific choices alienates the majority of potential buyers, meaning it’ll take longer to sell the home.
2. You Overbuild for the Neighborhood
Before you buy a house, make sure you check comps in the area, and more specifically in the neighborhood. If homes are selling in the $300,000 range and you make design choices that take your investment too close to or even above that number, you really don’t have a chance to recoup your costs on the project. It’s good judgment for buyers to not buy the biggest or most expensive home on the block, and you’ll definitely see this as the case if you overbuild or overdesign in any given neighborhood.
3. You Underestimate Finances and Overestimate Selling Price
Your whole goal when flipping a home is making a profit, so it’s important to make sure you have your finances in order and you have a good idea of what you can sell the home for when it’s done. Get an inspection done and estimate high when determining a budget for the house—that way, when an unexpected problem comes up that incurs extra expenses, you can cover it. Be realistic in your expectations for selling price, too. Grossly overestimating what you can sell the house for in combination with an underestimate of your initial costs will shrink your profit and potentially leave you in the red when you finally do sell the home.
Even in the direst of conditions, most homes have the potential to go from absolute disaster to showstopper with the right layout and design choices. Avoiding these 3 common pitfalls is the easiest way to ensure success in your flipping endeavors.
For more help and information on home rehab, check out the Real Estate Elevated program. Real Estate Elevated reviews speak for themselves--you’ll get the help and knowledge you need to find your own success. Happy flipping!