House flipping looks so easy. Find a property, plan the renovations and bam!! The house that seemed so ragged now looks very pretty and done with the makeover. Like, the fairy godmother flipped her wand on cinderella. But, we all know that Cinderella’s story is just a fairytale.
The house flipping business is more than just a pretty makeover. It is no less than the real estate business. Here, the person needs to gauge the property before flipping and estimate the price depending upon the market after the renovation. Anything that goes wrong will cost you a fortune!
Here are some of the mistakes you need to avoid,
The money factor
The beginning and the endpoint of this industry is money! You need to invest handsomely in finance to earn a handful of profits. Well, the good news is that in 2019 flipped homes accounts for around 6.2% of all home sales. It shows the business has a bright future, however, the investment risks are higher.
Don’t make the mistake of spending heavy amounts on the property before repair along with the repair charges. Research about the house value and the repair costs that come with it. The investment amount should be equivalent to 70% of the after repair value (ARV). So, finance wisely.
A common mistake that every new home flipper does, is not focusing enough on the marketing strategy. People won’t know that the property is on sale unless you proactively market it online and offline. Just placing a sale board on the curb won’t help. Get out there and let people know about your property before it goes out of fashion.
One of the most economic ways to get more attention is by emailing potential clients. The return on investment (ROI) of email marketing is 4400% per every dollar spent! And finding email addresses has become very easy these days. GetEmail.io is an email search engine that can also fetch you LinkedIn email contacts. Its extension to this professional media makes it possible to access the addresses easily.
The right skillset
Can a florist carve a perfect flower on a piece of wood in a couple of attempts? Florist knows everything about the flower. From how and when they bloom to the procedure to keep them fresh that lasts long. No matter how well she/he knows about the flower, they cannot carve the same because they don’t understand how the wood works.
The same goes with house flipping. Just because you heard your hotshot friend investing in house flipping and making millions of dollars doesn’t mean you jump the wagon too. Get to know about the industry first. Understand properties and how their price fluctuates depending on the market. It is a bonus point if you know the skills such as plumbing, painting or installing appliances, etc.
If you’re thinking about flipping houses as your future profession, then also calculate the risks that come with it. Be patient with the deals as they take time.