4 Mistakes New House Flippers Make
House flipping is expected to make a comeback in 2025 thanks to a growing housing market. Although real estate flipping is a great way to make money, it’s not something that one should rush into. It requires knowledge about construction, patience and money to invest. If you’re interested in becoming a house-flipper, avoid these beginner mistakes:
Insufficient Funds
People new to house flipping frequently underestimate their expenses, which has a negative impact on their profit and can affect them in a number of ways. Before purchasing a house to flip, be sure to factor in the following expenses:
- Overall buying cost of the property.
- Fees and taxes that come with selling the property.
- Taxes, insurance rates, utilities, repair costs and maintenance expenses that you pay while owning the property.
- If you don’t have the cash to pay for your investment, you’ll need to factor in financing fees as well.
A good rule of thumb when flipping property is to add 20% of the selling price to your budget to cover all associated fees.
Not Investing Enough Time in the Process
Just like running any other business, flipping property is a venture that takes a lot of time and effort. Many people underestimate how much of their time will be spent scheduling inspections and completing paperwork. If you’re not repairing the property yourself, then you’ll need to hire artisans to fix the house’s woodwork, wiring, plumbing and so on. Once you’ve finished restoring your property, you’ll need to set aside time to meet with people interested in buying the property.
Overestimating the Housing Market
One of the biggest mistakes that new flippers make is to overestimate the housing market. Just because housing prices are increasing at the moment doesn’t mean that this trend will last indefinitely. By assuming that your property’s future value will be significantly higher than its current value, you run the risk of investing more money in renovating the house than the property will be worth. This overly optimistic approach has bankrupted many beginner flippers who were eager to make a quick profit.
Asking Too Much for Your Property
It’s important that you come up with an action plan before you make a real estate purchase. Decide how much you’re willing to invest in flipping the property and what you expect to make as your profit so that you don’t go over the budget. Many flippers who’ve gone over budget try to make up for it by increasing the property’s listing price. This can make your property more difficult to sell, which will cost you more money and could leave you stuck with a house that nobody wants to buy.
Flipping a house isn’t easy, but with realistic expectations and a little bit of caution, it can be an excellent source of income. If you’d like to learn more about how to buy or sell property, give me a call today.
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