9 Incredibly Important Do’s and Don’ts of Flipping Houses

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We are always hearing about things that we need to be doing and things that we need to not be doing, but they usually aren’t dicussed together. Do this, but don’t do that. That’s what I did with this list of 9 do’s and don’ts when it comes to flipping houses.

    • Do make sure you buy right. Make sure the numbers for the deal make sense. You make you money when you buy. Don’t count on appreciation.
    • Don’t let emotion and the strong desire to get that first flip deal under your belt affect your decisions.
    • Do make sure you have the ability to determine values and repair costs accurately.
    • Don’t make wild guesses based on limited information and never, ever base your buying decisions on what other people are telling you. You have to do your own due-diligence.
    • Do hire a professional to do the repair work. Take the time to find the right contractor that is licensed and insured. Hiring a professional to do the work will allow you to free up your time to do more important (read profitable) things and should produce a more professional product.
    • Don’t just hire the first contractor you find on craigslist. Trust me, it’s not a good idea.
    • Do have a written contract between you and your contractor that spells out exactly what is expected and at what points draw can be made.
    • Don’t just hire somebody and have them start without a contract. DO NOT pay them half up front either! …unless you feel like losing money.
    • Do look at what houses for sale in the area look like and try to make yours nicer, but without overdoing it.
    • Don’t do a cheap, lipstick-on-a-pig rehab either.
    • Do pay attention to how much you are spending on the house while you are holding it. You have to know what that flip is costing you every day that you own it.
    • Don’t just blindly and slowly go about fixing up the house and let it take months, only to find out afterwards that your holding costs (loan payments, taxes, insurance, etc) cost you most or all of your profit.
    • Do try to focus on the kitchen and bathrooms and anything that is special or stands out for each house. Maybe there is a dated fireplace in the living room. Maybe you could make it really stand out and set the house apart by tiling it with glass mosaic tile all the way up to the ceiling. Maybe the living room and kitchen are separated by a wall that can be removed which would open things up.
    • Don’t just make it look like a white tornado blew through and make your house look like every other flip house that ever was. Make it stand out.
    • Do stage your finished flip house. Staged houses sell much faster than vacant houses, especially if they are tastefully done.
    • Don’t feel that staging the house will be a waste of time and money. It’s an investment with a high rate of return when it comes to how much is saved in holding costs and avoiding price reductions.
    • Do price your finished flip right. Price needs to be based solely on what the comps (comparable sales) show you it should be.
    • Don’t price it based on how much work you put into it or how much you’ve spent on it or what you feel you ‘deserve’. Those things have nothing to do with what the price should be.

Follow the advice of the do’s and avoid the pitfalls of the don’ts and you will have a much better chance at success in your house flips.

I’d love to hear about any do’s and don’ts that you might have. Please share them in the comments below. I look forward to reading them.

Photo: Carl Jones

About Author

Danny Johnson (G+) is a real estate investor in San Antonio, TX. Visit his blog: Flipping Junkie - A House Flipping Blog to follow along with him as he shows, in detail, the marketing he is doing, the leads being generated, the lead and deal analysis, the rehabs and really, just about everything. He also provides real estate investor websites at LeadPropeller.com.

13 Comments

  1. karen rittenhouse

    Do add in holding costs.
    Don’t assume everything will go smoothly and you’ll be ready to put it on the market in 30 days.

    Do realize that a buyer will want more work done and need time to close.
    Don’t expect a 30 day contract to close. (refer back to “add in holding costs”)

    Thanks, Danny, for a great post.

  2. Just want to say thanks Danny
    Another great post, your blog rocks!!!
    I have your ebook and its great as well.
    Thanks for passing along all your knowledge and experience

  3. All good stuff Danny. I like #9. If you over budget that is just too bad and you will not get it back trying to sell the house for more money. It will most likely cost you money. Its like bad money chasing bad money. Suck it up and move on to the next one.

  4. Jason Brooks on

    Great post Danny! As I continue to build my business, these are questions and points that come up in the natural progression of taking “massive action”. A bit of solace I suppose (at least in my market) in the scenario of a house not selling for what you feel it should be worth, or the holding costs eating up the profits would be a different exit strategy that satisfied the payment on the loan(s), thus stopping the bleeding. Maybe a lease option or straight rental scenario with a refi. At least in this scenario, you would cut the capital gains tax in half, which in essence (or theory if you will) would increase the amount of that profit you get to keep 🙂
    Am I correct in that analysis?

  5. Nice article Danny, unfortunately I have violated at least 3 of these so far and I am not anywhere close to being done. The good part is that it is my reaol estate company and it can cover the holding costs for an extended time. A few of us got together and decided to try the flip by doing it ourselves. So far we have all been too busy to get anything more done then a weekend here or there. I am considering scaling back the plans and renting the top floor our until we can finish the basement. Thanks for the article, I enjoyed it.

  6. Wow, excellent article. I have been struggling with getting a rehab done in a neighboring town that me and my handyman took on jointly. We have both been so busy it may be time to hire it out. The advantage of doing work my self is realizing how much time and work it takes to do certain things. If a contractor cannot do s window or door faster than me I probably don’t want him. I tend to be a perfectionist and take too long.

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