What are the top financial mistakes house flippers make?
Every house flipping project has many facets interwound from beginning to end. At every stage, there are many things that can go wrong. Here are some of the top financial mistakes that house flippers make, which you should do your best to avoid.
The top mistakes that house flippers make relate to the following:
- Falling in love with the house
- Buying the house at too high of a price
- Improving the house beyond the market
Another mistake commonly made is when the project is finished, the house flipper prices it unrealistically high because they personally believe “it's beautiful.” While, the property may be beautiful, it’s important to know that a house at too high of a price goes stale very quickly.
As as house flipper, you need to make sure that the property is priced correctly at the beginning. If the house is priced too high and you’re not getting any action on it in two weeks, you should drop the price.
Another mistake that we too commonly see is a failure to plan. A house flipper thinks, "Oh, it will all work out." In reality, you need to start with a house flipping business plan that defines the purchase price, rehab costs, financing costs, realistic timeline and all general expenses over the course of the project.
You need to understand the economics of their deal before closing on it.