Real Estate Elevated: Investing Mistakes
The path to real estate success is definitely filled with potholes and twists and turns. If you’ve been investing in real estate for a little while now, then you probably already know that house flipping, in general, is actually a lot simpler and easier than a lot of people think. If you can find a good deal on a distressed property and rehab it for less than you can sell it for, then you’re in great shape. Of course, just like any other business, it’s not quite as simple as the basic definition, either.
You’ve no doubt already learned a few important lessons along the way about the surprises that foreclosure auction properties can hold and what can happen if you go over budget or a house sits stale on the market for too long. Those are all just fundamental parts of learning to flip houses for cash.
However, if you want to make every house flip go farther and do more for you, you might want to pay attention because you may be making some very common mistakes that could really eat into your profit margins.
Planning Your Flips as You Go
First, when you watch real estate investors on TV, it might look like they’re making everything up as they go along, but that’s really not the case. Basically, while it might look on our show like we do all of our rehab designs on the fly, Tarek and I actually go into every house flip with a solid plan.
After looking at everything that a house needs, I will create our rehab designs, and then we’ll call our contractors and start on a very structured list of things to do to get our house flip done on time and on budget.
Planning as you go won’t necessarily kill a flip deal, but it can end up costing you a lot more, especially for your rehabs. Taking the time to create a really good beginning-to-end plan for each property is a great way to see everywhere that you can save money and/or time so that you can improve your profit margin and sell the house faster.
Ignoring the Importance of the Neighborhood
This one might seem obvious because you know that you should always try to buy flip houses in growing neighborhoods with good markets. I’m really not talking about the market or the neighborhood’s growth right now, though. I’m talking about the houses and people around your flip property.
Basically, it shouldn’t be a surprise or a problem if you buy the ugliest house on the block. Once you’re done with it, you know that it’s going to be a beauty that homeowners are going to love. However, if you stop there, you could be in trouble. Look at the houses next door and across the street. Is your rehab going to make one or more of those look like a real eyesore? Are buyers going to look at the houses around theirs and wonder what kind of neighborhood they’re moving into?
Basically, you want to rehab your properties to the point that they essentially match the houses around them. Then you want to get the neighbors involved by letting them know that you’re going to have a newly renovated home for sale near them soon. This is a great opportunity to let the neighbors sell the house for you because they want their friends and/or other people who’ll make good neighbors moving in next door.
Avoid these two house flipping mistakes, and you’ll be on your way to getting better profits, selling your flip houses faster, and moving on to more success with your real estate investing business.
For more information about real estate investing, visit Real Estate Elevated's BiggerPockets blog.