5 common mistakes you should avoid when fixing and flipping
October 14, 2022
Many people tend to face different problems when fixing and flipping or working with their properties in general, it is clear that it is not an easy task, and you can totally find yourself in tricky situations related to the topics that will be mentioned in this article. So, for your benefit, we will be talking about 5 of the most common mistakes that you can make when you fix and flip a house:
Letting a contractor decide for themselves the materials for your project
This is one of the biggest mistakes you can make when you are fixing and flipping your house, in addition to giving your contractor a design or a construction permission in a ghastly way or giving them a deposit that is too large. For reasonable purposes, you need to have in mind that there's plenty of sticking points of which you will have to be very aware of when facing a process like this.
Sometimes contractors and clients are not on the same page regarding procedures, prices, and paperwork related to the deal that is being done. It can get really awkward with these situations, a lot of contractors seem to know what they are doing, and they will probably reassure you so, but even though it is their job to work with materials, sometimes they can get you the total opposite of what you expected for your project. You should, along with your contractor, look into the materials being used and therefore make sure everything is working in your best interest.
Giving too much trust to your contractor
If you don't want to lose your money, you should keep in mind that a lot of contractors tend to work with different deposits from many people, and you can find yourself in a situation where a contractor is using your deposit for finishing an older deal with someone else. So do not begin your project with a large sum of money up front; instead, the best thing you can do to prevent losing money is to organize the dates of the project and break up payments fairly throughout to make sure you are actually going to receive the result desired and that the work will be completely in the timeline promised.
Getting too emotional about your first project
You must keep in mind that a fix and flip is an economic activity, yet it is normal to become attached to your first project. However, at the end of the day, the reason for this project is for you to be able to make a profit from it. If you let emotion get the best of you in the process of this project very easily, you can be blinded from making the best decisions for your business and its future outcome. So keep an eye out for the best business, looking forward to decisions that you might miss if attached to your property.
Over improving and under improving your project
: It is very common that when you are finally working on your property you feel like putting in the best and only the best of products, but sometimes this can be self-defeating and non-realistic because of high expectations which at the end of the day will cost too much money without really adding the value you really need to get for your property.
: Let's say you get a property in a high-end neighborhood, and thus you think doing lower inversions in the materials and products can save you money. It probably will save you some in the present, but the materials going to be worn out quickly, and you will have to buy them with more frequency. So, at the end of the day you will be losing time and money in replacements, and the property will decrease its value.
Not paying attention to your demographic
Demographics are a key aspect in any kind of fix and flip process, you have to remember you are dealing with real estate. For your renovation, it is always important that you know very well the location of a property and the quality of its surroundings, since it will always have an impact on the overall price and the chances you have for renting or reselling in the future.
Apart from this, what else could you do to avoid mistakes like the ones mentioned?
Fixing and flipping is an overall a very challenging process that requires dedication, touch, and of course time. You will always want your house to look the best possible and have the best deals around it. So do your research, and please make sure you know what kind of contractors you are dealing with, work with precise schedules and make sure that these are taken very seriously at all times. Try your best to keep your attention in every single detail and for more confidence try to work with someone you trust as well, like a family member or a close friend.
Remember, at Gallagher Capital, we offer you the opportunity to close quickly with a reliable and experienced lender as your financing partner. Do not hesitate to count on us when you need financing for your real estate investment, we can offer you a wide range of financial products to suit your needs. If you have any questions or would like more information, call or text us at 800-369-2342