NOT-To-Do List: Common House Flipping Mistakes to Avoid
Surprising changes in the real estate market has happened during these times of the COVID 19-pandemic. Despite the challenges, there is some good news for real estate investors and one good example is the rising demand for flipping houses.
The report of the ATTOM Data Solutions reveals that in the first quarter of 2020, there is 7.5% of home sales in flipping houses, which is higher compared to the recorded 6.3% in the fourth quarter last 2019. The gross profit on the typical home flip nationwide also increased to $62,300 in the first quarter of 2020.
Welcome developments in flipping houses encourage more investors to engage in this strategy. If you are planning to do house flipping or if you are already working on it, it is good to have some tips in mind. Likewise, you must also have a not-to-do list of actions that you must refrain from doing in order to attain successful investments.
Here are the common house flipping mistakes that you should avoid:
Mistake No. 1: Failing to analyze property
Property analysis requires cost-planning and careful budgeting. The “buy low and sell high” approach necessitates the flippers to purchase a house which is not commonly attractive to others. However, you need to have a careful analysis of the property because you may spend much in fixing it and end up with a minimal to no return. You may check our resource blog about property valuation and doing rehab costs to help you analyze the subject property.
You may also use our automation tools here. Feel free to check ROI Muse as it may help you avoid costly mistakes and make better investment decisions.
Mistake No. 2: Getting to bidding war without understanding the market
Every real estate market is different from each other. You need to have a market analysis to know the risks and strong points before entering a deal. Understanding the market will also help you to strategize when is the best time to flip the house.
Mistake No. 3: Failing to calculate the maximum offer
House flippers may get too emotional and excited in closing a deal. You may prepare a maximum offer but if you mistakenly calculate it, it will affect your return on investment and you may end up at loss.
An ideal agreement must end up with a good exit strategy. To have the best maximum offer, you need a research-based price list. You must negotiate well, stick to the maximum offer, and win the deal.
Be part of our online events and webinars where we offer FREE discussions about real estate strategies, automation tools, and other business discourse! You may also read our investment blogs here.
Credits: Joseph James is the founder and President of www.roimuse.com, a company that provides Systems, Tools and Training for Real Estate Agents and Investors. His achievements include being a real estate trainer for single family, multifamily, and commercial real estate investments; serving as the Commercial Advisor of Real Estate IQ and the Director for Commercial Group in 2020.
The blog articles are intended for educational and informational purposes only. Nothing in the content is intended as legal or financial advice.