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House Flipping and What NOT To Do

If you have thought about house flipping but you are one of those people who do not like to jump into things without knowing the “cons,” then read our tips below on what to avoid (if possible), when deciding to flip homes. It may solve you a few headaches and tons of money in the process.

Beware of House Flipping with Friends

It is one thing to establish a business and take on economic risk with someone who is legally recognized as your partner, but another matter entirely to begin house flipping with friends on a casual basis. Although flipping can be fun for those who have an interest in renovation and in turning a relatively short-term profit, it can also be grueling work with unforeseen turns in the road. If you are totally committed to the idea of flipping with a few close friends be sure to outline in writing what home types you intend to target, the types of repairs, how you intend to divvy up the work, and how much you all will invest and intend to make. The more you put on paper, the better, in order to avoid misunderstandings later on.

Beware of House Flipping on a Lean Budget

Whether you decide to use your savings for flipping or your credit cards, be sure you have a firm idea of how much you wish to spend on renovations when it comes to house flipping. Not only should you have an extra store of funds available on hand for unforeseen repairs and expenses, but do keep in mind that there may be additional fees incurred when selling the home, such as cleaning, advertising and attorney fees (if selling on your own), title transfer and/or taxes. Consult with your accountant to get a firm idea as to what you should expect before dedicating yourself to a certain budget.

Beware of House Flipping in an “Up and Coming” Neighborhood

If you are lucky you will find yourself a real estate agent who will give you a fair and honest view of the neighborhoods that interest you. But just to be sure, make sure you do your homework and check in one another agent or two just to be sure. House flipping is not something that you want to do based on one person’s opinion especially in a tough economy where buying in a ‘tough-to-sell’ area could be your downfall. Make sure you do your own research and supplement that with the opinions of a few agents just to get a better feel, as there are no guarantees in real estate.

Beware of House Flipping on a Tight Schedule

If there is one thing that can tie you up and cause a horrible domino effect in your house flipping business it is trying to rehab a house on a schedule that is unrealistic. Just like a small budget, a tight, unrealistic schedule can lead to money issues as the project becomes prolonged with each missing milestone. Be sure you have someone on your team who can provide you with an unbiased, realistic view of how long it would take certain repairs and find the contracting resource who can stick to that schedule – for the sake of your project and your ongoing flipping business.

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