House Flipping Mistakes to Avoid
Some people are still trying to make a quick buck "flipping houses". While real estate remains a good investment, house flipping may or may not suit you and your level of risk aversion. (It sure doesn't work for me and mine; I find myself unwilling to risk my family's good fortune on trying to make a quick buck.)
However, if you are thinking about flipping a house, keep in mind that it's all about the market. If you are in a local area where the prices are still appreciating rapidly, flipping a house could make you some good money. But some regions of the country are experiencing a real cooling in the market, if not a complete downturn. So know your market before you leap in.
Still think house flipping is for you? Here's some first time house-flipping mistakes to avoid:
Either finance 100% of the property, or get private money for the downpayment. Putting a small downpayment into the property simply ties up money that you could be using to fix it up for sale.
Decide how you are going to proceed BEFORE you buy. House flipping gives the best returns when the property is in your hands for the shortest possible time. The longer you have the property, the more your carrying costs go up.
Get a number of bids from contractors for any work you can't do yourself. These bids should include a solid completion date with penalties if the dates are missed.
Problem with your contractor? Fire that person promptly if the problem can't be or isn't being addressed. Make sure the contract you have with your contractor allows for firing for non-performance, without penalty to you.
Want to make the most money out of your property? Put it for sale by owner! Market the property yourself and pocket the real estate fee.
Set the selling price in your mind even before you buy the property, and then be prepared to hold that price for a reasonable amount of time before you decide to drop it. If the market is truly a "hot" market, you should be able to get a good price for your property without having to negotiate too much.
As you can see, you need to use common sense -- and a flair for taking a chance. If you are risk averse, buy bonds. If you like a bit of adrenalin and can handle the challenge -- flip a house.