Fix and Flip Mistakes to Avoid to Ensure a Successful Business
Real estate investment via home flipping can be creative, fun and lucrative–if you avoid the most common pitfalls. Heed our expert advice for fix and flip success and avoid these critical errors:
Lack of Sufficient Start-Up Money, with Padding to Weather Break-Evens or Losses
Mortgage interest increases your “break even” on the future sale of your rehabbed property. Even if you buy the potential flip outright, with cash, you still experience carrying costs, like utilities and taxes (including capital gains taxes). You must also pay for renovations adequate to make the home tempting to buyers, by replacing appliances, upgrading home finishes and/or adding a bathroom.
Lack of Time for Each Step in the Fix and Flip Process
You must research, locate and buy a good flipping property. Then the clock starts to ensure the best profit (or any profit at all). You’ll need to fund (and wait for/schedule) inspections and conduct repairs to meet building codes. You must allocate time to selling the completed property. This can involve staging with home furnishings, advertising, scheduling open houses or private showings—or paying a realtor–and more.
Lack of Skill to DIY or Properly Supervise the Property Rehab
You’ll often need to contribute sweat equity in order to get the home renovated quickly and save money. You’ll also need to manage the skilled labor and stages of construction. Even with a general contractor, you still need to be very involved in the pacing of property rehab on your fix and flip.
Lack of Experience to Make Good Local Real Estate Business Decisions
Do you know how to choose the right property for flipping, in the ideal neighborhood? Can you negotiate the best price, to allow for profit? Can you accurately predict how much renovation the home truly needs, and its cost and timeline? Are you familiar with zoning laws? FSBO (for sale by owner) flipping saves money, but requires real estate skills and judgment.
Lack of Patience to Do Every Step Properly, Yet Quickly
You need the nerve (and the money) to wait until you find a good fix and flip property at the right price–and to gain all of the above skills that you might lack.
When you need a fast, flexible business loan for a fix and flip, work with a lender who understands your needs. Contact Revap Group Capital today.