With the recent market shifts, investors may be tempted to buy a home at a reduced rate with the intention of flipping the house. This can be an exciting proposition and an excellent way to turn a profit, but if you are not an experienced investor, there are a few things you need to know to ensure you come out on top.
House flipping is much riskier than other real estate investments due to the quick turnaround. These are the five biggest mistakes we see with house flipping:
#1 Spending too much money upfront. It is imperative to work with a knowledgeable mortgage broker and realtor to buy into a neighbourhood and home that will appreciate quickly once the renovations are complete. Having intimate market knowledge is essential when searching for a house flip that will garner the profit you intend to make.
#2 Strike a balance between construction, design, and property value. Often inexperienced house flippers get caught up in the idea of turning a profit and neglect the project details, which can land them in hot water. You want to budget carefully for each piece of the renovation, including changes to design and delays that may occur.
#3 Understanding your target buyer. Flipping homes is usually done much quicker than selling a primary or rental property; therefore, considering the potential buyer must be in every decision. The home you are flipping is not for you, so your taste and design aesthetic does not need to be part of the plan. Removing personal feelings or attachments is the only way to ensure you keep the potential buyer and market trends and demand top of mind.
#4 Leave DIY out of it. Being able to DIY your projects is so important, but it is best to consult and hire professionals when it comes to significant changes and renovations. The potential buyer may request a home inspection, so you want to have all the correct paperwork showing that everything in the home is to code.
#5. Managing timelines closely. Anyone who has ever been involved in a renovation knows that timelines shift at the best of times. With a house flip, keeping timelines on track is important for managing the market. Working with trusted and confident contractors and professionals who have open and honest communication is key. When possible, assemble a team of workers you can use again and again to build up long-lasting, trusted relationships.
House flipping is not as easy as it looks on HGTV, but it is possible to be successful with a lot of hard work and dedication. If you are interested in capitalizing on some of the reduced prices to become a real estate investor, contact us today to review all your options. An informed decision is the best decision!