What Are the Biggest Mistakes That Can Ruin A House Flip?

House flipping has become increasingly popular over the years and it’s not hard to understand why. There is the potential to make great profit and, although it takes a lot of time and money, it gives you the chance to improve the local community. You make cosmetic improvements or structural repairs and alterations, which ultimately elevate value. House flips can result in maximum profitability. You can live the American dream in Canada, just so you know. It’s the land of opportunity. Getting back on topic, many things can go wrong as far as house flips are concerned. If you want to make real estate investing work for you, make sure to avoid these common mistakes:

Not Having Enough Money to Begin With

Purchasing real estate at a low price and improving the property to sell at a much higher price can be a lucrative undertaking. The rehabilitation costs about 10 percent of the purchase price of the house. Consequently, you’ll have to dig deep into your savings. The first expense is the acquisition of the property. If you don’t have enough money, ask a lender if they are willing to support the closing cost of the deal or at least help you with the down payment. Consider taking out a conventional bank loan. The financial institution will pay for the property, while you pay the mortgage payments until the dwelling is sold.

In addition to amount of money paid for the house, there are the expenses associated with restoring and improving the property. This includes buying renovation materials and hiring contractors to do the hard work. Sine you intend to remodel the dwelling and put it up for sale, the sale price has to go beyond the cost of buying the home, the holding costs of the investment property, not to mention the expenses linked to the improvements made to the home. The point is that you need to invest a little bit of money to realize a profit. Once you add up all the numbers, you don’t want to find out that you lost money. Rehabbing words, but you need to have sufficient cash at your disposal.

Not Understanding the Real Estate Market

You risk making many mistakes if you don’t carry out market research. Imagine the following scenario: You renovate a home in a beautiful and economical way. However, it’s located in an area where people don’t want to live, so you’re unable to sell it. The real estate market is locally oriented and every market behaves in its own way. What you need to do is to map the terrain and get a sense of its value for investors and end users.

Everything from the location to the renovations you choose to make matter. Here is how to do real estate market analysis in 3 simple steps:

1. Establish the future value of the distressed property after it has been fixed.
2. Set a fair price based on what the property is worth in the market.
3. Figure out if you’re dealing with a profitable house flip.

The point is that it’s possible to make the most out of your investment, yet if the real estate market shifts in a bad way, the property isn’t going to sell. Get a good understanding of the local market. Look at comparable home sales. You can find a great deal of real estate data online.

Not Having the Necessary Skills

When it comes to flipping a home, time and patience are of the essence. Improving a property with projects that can grow its market value is a time-consuming undertaking. You must take your time and wait. What is more, you must have the right skills to be able to fix and flip houses. If you’re not very skilled at plumbing, woodworking, painting, and so forth, pay someone else to do it. to be more precise, have an expert undertake the repairs and renovations.

If it’s necessary to, say, repair the garage door spring, call a person who is an expert in such matters. In the property is located in a really desirable area, such as Calgary, Alberta, you’re quite lucky because it’s easy to find technicians specializing in Calgary garage doors repair. But is the garage door so important? Yes, because it’s one of the first things that homebuyers notice. Investing in the repair of the garage door will enhance the curb appeal of the home, besides the fact that it will make the potential buyer feel safer.

If you’re capable of doing the word yourself, even better. You can fix the roof, lay the carpet, and install the kitchen sink. You can read all the books that you can get your hands on and watch a handful of YouTube videos. However, the best way to learn to be your own handyman is to get your hands dirty. Renovate the entire property with the help of a plumber and electrician. This way, you’ll learn how things are built and maybe it will inspire you to take on another project.

Not Having Property Insurance

One of the most important things to include on your to-do-list: get property insurance. The insurance policy protects the vacant property that requires rehab against flood, fire or theft. Don’t go with the insurance company that you use for your home or car. What you need is a policy that covers your needs. These are the main types of insurance policies you need to know:

• Builder’s risk insurance: It offers protection for the materials, fixtures, and equipment being used in the construction phase. When you complete the construction, you’ll need a different kind of coverage.
• Home insurance: Protection applies to the dwelling’s structure, not the personal possessions found inside.
• Liability insurance: Liability insurance protects you, aka the owner of the property, and investors in case of loss. You’re safe when it comes to perils and liabilities.

Needless to say, insurance costs. Maybe so, but think about how much money you would lose if you lost everything to a natural disaster or if someone falls off the roof while working in the house. All that hard work for nothing.