Overlooked House Flipping Mistakes

Every house flipper makes mistakes. Over the years, our clients have told us about all sorts of house flipping mistakes they've made on the job. All of these mistakes are common, but they're also frequently overlooked. Read through this list carefully in the hope that you might be wiser than your predecessors.

Mistake #1: Going it alone

This is a mistake almost every house flipper makes the first time around. Many people get into house flipping because they're excited about doing the actual work of renovation. The vast majority of these people quickly realize that being your own contractor is both exhausting and costly. Completing renovations on your own, no matter how skilled a craftsmen you are, will almost certainly slow down your flipping process and end up costing you more money than it saves.

A good contractor can help keep your flip to a tight schedule and ensure that projects are done right the first time around. Of course, a bad contractor can do just the opposite, which is why taking the time to find a good team (contractor, realtor, accountant, private money lender) is the first and most important step in any successful house flipper's career.

Mistake #2: Not having a backup plan

Sometimes things just don't go the way you expect them to. You might have picked a great house in a great neighborhood with great expectations of making exceptional ROI, but the buyers simply don’t bite. If things go wrong and your house ends up sitting on the market for months, it's essential to have a backup plan ready in order to save your investment.

One of the most common and effective backup strategies is to convert to a buy and hold investment plan. In this scenario, you remain the owner of your investment property and rent it out for a few years until the market turns in your favor.

Mistake #3: Not paying attention to the neighborhood

This problem can manifest in a few different ways. It may be that you're looking at houses in a neighborhood you're not familiar with, and you simply don't have a strong idea of what buyers in that area look for. Make sure to do your research and get a strong understanding of what's desirable in a particular neighborhood. If you can learn early on that what sells in your neighborhood may not be what sells in your investment property’s neighborhood, you'll be much better off.

It's also important to pay attention to houses that neighbor your investment property. This may sound like a no-brainer, but new house flippers are frequently amazed to see just how shabby the neighboring houses look in comparison when their flip is done. No one wants to buy the best house on a bad street, and sometimes a great house makes even a decent street look bad.

Mistake #4: Making the house too nice

We blame this problem on all those reality TV shows about house flipping. The crews always go into a terrible looking home, and by the end of the show, the house looks like a dream. While a big part of house flipping is renovation, it's important to understand that you don't have to make the house absolutely perfect in order to attract a buyer.

You aren’t selling a dream home – you’re selling a template that a potential buyer can walk into and easily imagine turning into their dream home. The best way to appeal to a wide variety of potential buyers and also keep your costs minimal is to create a home that is nice, but not overly styled, decorated, or personalized.

Mistake #5: Waiting too long to secure rehab loans

Particularly when competition is fierce, one of the biggest mistakes an investor can make is waiting until the perfect property comes on the market before seeking out a rehab loan. Professional house flippers make sure they have the resources and financial support they need before beginning their housing search in order to ensure that they can act quicker than the competition when the right property comes along.