Mistakes That Can Make Flipping a Flop

House flipping can seem like an exciting new venture, especially if you have the handy work skills to tackle a lot of the updating yourself. However, if you are new to the house flipping scene, there are several common mistakes you may be making that can turn your dream project into a nightmare.

If you want some experts tips on what NOT to do, see below for a list of issues you may face that can affect your profit.

Forgetting to involve the city. If you are doing major renovations on a home, you will likely have to acquire permits from the city before proceeding. Nothing will stall a project longer than waiting on government paperwork, so try to get everything applied for and approved before you begin.

Going overboard on fancy finishes. You may think that adding those granite countertops or all new cabinets will increase the home’s appeal to buyers, but keep in mind that not everyone will have the same design tastes as you. If you spend a chunk of the budget on fancy finishes that don’t perform like you thought they would, you’ll be out the money you could have used more wisely.

Skipping quality work over a timeline. Sure, keeping a residence you aren’t residing in can become expensive, but that’s no reason to rush through a job. If you skip out on the quality work in favor of a fast turnaround, your potential buyers will know, and so will their inspectors.

Paying too much for a property. If you want to come out ahead, it’s crucial to follow what’s commonly known as “the 70% rule.” You should only be spending 70% of the after repair value (ARV) with your renovation costs subtracted. If you ignore your budget, you may not only not profit much, but end up losing money. One great way to secure fast financing for a flip is through a hard money lender. A direct loan can give you the funds you need to buy the property based on the ARV, and if you stay on budget and make quality repairs, you can pay the loan off within the short time frame after the house sells.

Neglecting the landscaping. It’s easy to get so lost in the home design that you completely forget about the curb appeal that comes with landscaping. However, the yard becomes the “face” of your project, and potential buyers are going to be turned away from a sloppy landscaping job no matter how beautiful the home on the property. Hiring a gardener to trim the bushes and cut the grass will make it look like the house has been cared for, even if it’s been subject to neglect for years.

Trying to do it all yourself. If you can tackle some of the remodel, then great. However, if you’ve never touched electrical or installed plumbing, it’s best to leave these jobs to the professionals. You may feel the pain temporarily with your budget but will save money for a job done right the first time in the long run.