Flippers have had a pretty bad reputation these past few years, especially after the housing crisis, but with the market improving, more flippers have been getting back in the market. Truthfully, careless flipping can be very harmful, not only for the flipper, but for the market they work in as well. This is exactly why we must learn from the poor practices which flippers of the past once used.
Here are three common mistakes which have gotten flippers into trouble in the past:
1. Do not buy a home expecting the value to appreciate on its own.
This is one of the worst problems which flippers faced during the housing boom and bubble. Many flippers expected an almost immediate turnaround on the investment, and they were burned when the market dropped. This is why investors should try to buy at a reduced price, allowing them to sell a home and make instant profit, and not have to wait for the market to improve.
2. Don’t cheap out on repairs and renovations.
One of the simplest ways to improve the value of the house is to perform quality repairs and renovations. Desired renovations can have a major impact on an appraisal, which can greatly improve your profit from a sale. It’s also important to save your receipts to prove your work to the appraisers, as it never hurts to have an abundance of munitions.
3. Plan out your exit strategy.
Although plans may change overtime, it’s crucial to always have a plan and stick to it. Some investors buy a home expecting to turn around and sell it quickly, but shortly after find themselves with a new plan and regretting it. Holding out for a higher offer or even deciding to rent out a property instead of selling can cause unexpected problems for a flipper, who just wanted to make a quick profit.
Investing in real estate can be an enjoyable and profitable experience, but it can also be a very risky game to play, which is why we should all learn from the mistakes of the past.
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