Fixing and flipping a home has become a popular side hustle or full-blown career for many people. While the potential to make a significant profit in a relatively short amount of time has drawn thousands into the business, there is also a considerable amount of risk involved. If you don’t play your cards right, your fix-and-flip project could end up costing you a significant amount of money. To prevent your fix-and-flip project from becoming a flop, make sure to avoid the biggest mistakes that house flippers make.
Not securing financing until it’s too late
One of the most common mistakes that first-time fix-and-flip investors make is failing to secure financing until it’s too late. Often, they put all their energy into finding the perfect house and making an offer. Then, once their offer is approved, they realize that they don’t actually have the money they need to buy the house and that there isn’t enough time to secure a loan.
To avoid losing out on a great property, it’s important to line up your financing before ever making an offer. Some of the best financing options for fix-and-flip projects include hard money loans, Balloon mortgage loans, and hybrid ARMs.
Forgoing the house inspection
When time is of the essence, it can be tempting to cut corners to close a deal. However, one corner you should never cut is the house inspection. Before purchasing a property, it’s essential to get a pre-sale inspection to determine if there are any serious issues with the property. You don’t want to get stuck with a house that has significant structural, plumbing, or electrical issues that will blow your renovation budget through the roof.
Not researching the local market
Another one of the biggest mistakes that house flippers make is not researching the local market. When it comes to fixing and flipping houses, the renovations shouldn’t conform to your own tastes. Instead, they should suit what local buyers want. For example, unless your project takes place in a high-end market, buyers may not be interested in purchasing a home with significant upscale renovations. To get a better return on your investment, research what types of home features are selling well in the local market, and make renovations accordingly.