Biggest Mistakes House Flippers Make
In this modern 21st century of innovative methods to make a living, so many individuals begin their journey to becoming a property market mogul with the idea of ‘GETTING RICH QUICK’. However, the vast majority of those people fail to do their due diligence and wind up with a property that they’re finding impossible to offload and no remaining funds in their bank account. Now, as much as it is possible to flip houses quick and turn your property market investments into a tidy little, or should I say BIG, earner, without the necessary research and knowledge, you may fall flat on your face.
So, if you’re dreaming of sitting on a sandy beach with an ice-cold cocktail in your hand, knowing you’ve got a plethora of properties in your portfolio, a multitude of properties currently selling and plenty of money in the accumulated in the bank, then continue reading. We’ll highlight some of the common mistakes people make when trying to flip houses, so you can avoid them and build up your wealth!
- Lack of research
If you really want to make it as a successful property market investor and incredible house flipper, then research is the key to the door of success. Knowledge is power. Many people purchase a property with zero patience and research whatsoever, and then wonder why they can’t flip that house very fast, flip that house at all, or have to end up taking a loss. If you’re expecting to buy a property in an area with an average price of £200,000 for £150,000 and then sell it for £300,000, then you’re going to be in for a wake-up call, as this is extremely rare.
There are three main aspects of this area:
- Do your research, and then do some more Make sure you know the average price of the area you want to purchase in, make sure you’ve listed some contractors to help you renovate, and make sure you know the ways to sell in that area.
- Create a solid plan; know how you’re going to buy the property, make sure it is in the correct area to generate a profit and then know how you’re going to sell the property.
- Have ultimate patience when buying a property. Don’t just dive in head first, negotiate the price, ensure it is the absolute right property, and if you do secure the property, be patient in hiring contractors or estate agents etc. to make sure you’re not spending excess.
- Lack of time
Everyone knows time is precious, and to renovate and flip houses efficiently, you’ll need to reserve more time than you probably anticipated. Now, when people talk about flipping houses quickly, they not referring to a couple of months, they’re suggesting a long period of time but quick in the grand scheme of things. Generally, it can take months to source and buy the right property. The following steps such give an overview of what it’s like, time-wise, to flip a property:
- First, once you own the house, you’ll need to invest time to renovate so you can sell for more, which can take a variable amount of time in itself.
- Then, before you can place it on the market, you’ll need to schedule inspections to make sure the property complies with necessary building regulations, and if you go through an estate agents, you’ll spend time liaising with them.
- Finally, you’ll need to set aside time to actually sell the property. If you haven’t perfected the property and it isn’t in an attractive area, it may take a while. Also, if you decide to do the house tours yourself, you’ll spend a great deal of time commuting to and from the property and meeting with potential buyers.
To sum it up, if you can flip a house in well under a year; you’ll be on your way to being a successful, speedy property flipper. But bear in mind, it can take an insane amount of time to build up wealth, for example if you can flip a house in under a year, and you make a 12% profit on a property that cost you £75,000, you’ve made £6250. Although, if you do your research, plan well and renovate wisely, you could make a lot more!
- Lack of money
This may sound obvious, but to enter the property investment battle and emerge on the other side victorious, you’ll need an adequate budget before you’ve even started. As a prospective property seller, you’ll only be imagining flipping houses quickly and making an extensive amount of money; you won’t be acknowledging the funds required to even begin your journey.
Let us talk you through the main factions which will eat away at your money:
- Acquiring the property – of course you’ll need a budget to actually purchase a house, so do your research first, but you’ll also need a large amount set aside for estate agent fees if you don’t source the house yourself. Also, if you don’t have the budget to purchase the property outright with cash, the finance options will demand interest.
- Holding the property – you may not have anticipated it, but you may be forced to pay taxes and bills, such as water bills and electricity bills.
- Renovating the property – this is an area where a lot of people underestimate the costs. Contractor costs, storage costs, equipment costs and the overall redesign of the property will accumulate to thousands of pounds. In order to stay on top of this, plan ahead, so you’re aware of the costs and can potentially renegotiate or source them cheaper elsewhere.
- Selling the property – yes, you may be brimming with excitement at this point, at the thought of offloading your property. But, there are still costs that come with actually selling the house. Again, estate agent fees come into play, as well as conveyancing fees and Energy Performance Certificate fees.