5 Mistakes to Skip During Your First Flip

You will make mistakes on your first flip. We absolutely guarantee that. House flipping mistakes are inevitable on your first few projects. As long as you learn from your mistakes and work to minimize them on each subsequent project, you should be fine.

But you should also do what you can to avoid some of the biggest mistakes made by novice flippers. If you’re starting a new house flipping business, watch out for these basic mistakes that can ruin your project.

1. Biting off more than you can chew.

There are a few different ways to make this mistake. The first is investing in a more expensive property than you can afford. You should never put your life savings on the line to start a business as a house flipper. Turn to partners and private lending firms to help you foot the bill and mitigate your risk. You’ll have to invest some of your own money, of course, but you shouldn’t be taking out a second mortgage in order to get your start.

You should also start small in terms of the actual work load. A house flip is always a major undertaking, but there are flips that can be done with primarily cosmetic changes and flips that require massive construction projects. Start with the former.

2. Underestimating how much time the flip will take.

This is a big mistake that almost everyone makes. The first few flips you do will inevitably need some wiggle room in the schedule as you work out unforeseen problems and streamline your workflow. Overestimate how long everything will take, and don’t just guess. Talk to your contractor to get reasonable – not optimistic – estimates of when everything will get done. Stay on top of any shipments, too, to make sure undelivered materials don’t hold you up. Remember that every schedule delay comes with an added cost.

3. Doing all the work yourself.

If you don’t have experience in construction, home design, or planning, you can’t expect to simply pick these skills up. You wouldn’t walk into an emergency room and assume you know how to set bones as well as the ER doctors. Don’t assume that construction is easy or that you can figure it out as you go. You’ll regret it.

And even if you are an experienced architect, home designer, or construction worker, don’t put the entire flip on your own shoulders. Working with a competent team will help you work more efficiently and effectively, resulting in a better margin.

4. Assuming home prices will keep going up.

Experts track the housing market carefully and make solid predictions regarding what it will do in a given year. But predictions are just that – predictions. You can’t stake your entire project on the hope that a trend will continue. You need to add real value to the homes that you flip, and you need to mitigate your risks so that a sudden crash doesn’t completely destroy your business.

5. Partnering with the wrong people.

Who you choose to work with on your flip – everyone from your lender to your realtor to your contractor – should be carefully vetted. Take the time to talk to past clients and check licenses. Nothing can sink a project faster than a flaky team. And don’t work with your friends unless you have worked with them before and know that you can trust their work ethic.