If celebrity house-flippers are to be believed, house flipping can be an art in itself. But it is first and foremost a business, and it can be a very lucrative source of income if done right. Watching HGTV shows may give you the impression that it can be a quick and glamorous process, with open house parties and million-dollar properties changing hands every week. However, unless you’re going in with a lot of capital, you’re probably going to be flipping decidedly unglamorous properties. And a lot of things are happening behind the scenes of these shows. There could be even mistakes.
There are a lot of things that could go wrong for new house flippers. If you want to enter this industry, you need to decrease your chances of committing mistakes as much as possible, knowing some of them may cost you big time. If you’re still looking for a resource of related knowledge, then look no further. Let this article provide you with some useful insights.
Mistake #1: Making Your Design Too Niche
The goal of house flipping is to make an old property appealing, so someone will buy it. You can employ various kinds of design, but many house flippers make the mistake of using themes that are too niche or trendy – the type of aesthetics that not everyone will appreciate. For instance, if you go for a Star Wars theme, it will take you a lot of time to find a buyer. And that means it will take you time before you get the money. Keep your design and remodel as neutral and widely-appealing as possible. You may not like it, but there’s a good chance someone out there might appreciate it enough to buy it.
Mistake #2: Picking the Cheapest Contractors
Yes, you’re doing business. And in business, a cheap contractor may look like a godsend. Think again. Not all cheap contractors actually provide quality services. Chances are they are offsetting their costs by going for inferior materials, which are dangerous in homebuilding. For big projects that involve machinery and skills you don’t have, like asphalt paving company or redoing the electricals of an entire house, call in experts. For smaller jobs like painting, basic carpentry, and fixture removal and installation, you may want to pick up these skills to lower your cost and increase your margins.
Mistake #3: Not Writing a Business Plan
If you treat house flipping a business, you need to have a blueprint that will help you achieve your goals, such as earning a specific amount of money or selling a specific number of flipped homes. You need a business plan. Draw it up based on your feasibility study, the ongoing demands, and your projections. If you have a team or a partner, you also need to draft bylaws and contracts. An exit strategy in place will also be a wise move.
Mistake #4: Picking the Wrong Business Partner
Sometimes, all you need is a partner to make the business work. Got a friend who says he’s up for the challenge? Thing again. A business partner does not necessarily have to be a friend or a family member. You will need someone who knows the ins and outs of the industry and has the connections. And if this happens to be a friend, then go for it – just come up with an agreement to make sure that your friendship won’t be jeopardized.
Be mindful of a Star Wars theme steps…always
House flipping can be a fun and exciting pursuit. But always remember that it is still a business. And when you’re doing a business, you need to make it a point to lower your exposure to risks. So, always be mindful of your steps.