House flipping in Agua Dulce appears to be a simple idea: procure a bargain property, do some remodeling, and then sell it for a much higher price. There is no question that house flipping has brought a lot of returns to many investors across the country. But flipping houses also involves a high degree of risk; a flipping project can rapidly transform into a nightmare if you aren’t ready. If you’re planning to try your hand at flipping houses, avoid these common errors, or you might find yourself in a real flipping nightmare!
Over-Improving the Property
One of the most frequent mistakes that can suddenly turn a house flip into a nightmare is not knowing how much to improve the property. For instance, fresh house flippers commonly go too big in renovations, spending a lot more than they have to. Overspending can lead to budget complications and losing out on profits when you sell. Unless the property you bought is in a very high-end area, there is no reason to go too upscale. The best improvements will bring the property up to the level of the other homes in the neighborhood – but not too much beyond that.
Dealing with Property Damage
Another reason that a house flip can become a nightmare is if you encounter vandalism, theft, or property damage. If a property has been sitting vacant for a considerable time, this problem could be more likely to happen. House flipper Carol Sankar of Charlotte, NC, describes one project in which the home was burglarized multiple times during the remodel. One day near the end of the project, she got to the house to discover that the kitchen cabinets had been stolen right off the walls. A dishwasher and a refrigerator also went missing. Because the property was in an area with few security measures and a low police presence, there was little Sankar could do to get back her stolen materials and appliances.
Costly Mistakes
A third situation that can make a house flip haunt you is when making expensive financial errors. For illustration, house flipper Daniil Kleyman in Richmond, VA, procured a project house for what he assumed was a good deal. An experienced investor, he did a preliminary market assessment on the property and thought he could remodel and sell it for five times his cost. Unfortunately, Kleyman made a series of errors that resulted in losing money on the flip.
Not only did the first contractor he hired walk off the job with his money and without completing the work he was hired to do, but Kleyman had also used it when estimating his post-remodel sales price. As a result, he had to list the property for far less than he had planned. And then the property was burglarized, stripped to the walls, plumbing broken, and flooding in the basement. After repairing the damage and replacing the stolen appliances and fixtures, Kleyman was eventually able to sell the house at a loss to a less-than-enthusiastic buyer.
Avoiding Flipping Nightmares
Stories like these reveal some of the challenges that come with flipping houses for resale. These investors would have done much better from the start if they had accurate market data, proven construction professionals, and the expertise of property management professionals. In Kleyman’s circumstance, specifically, by first talking to an industry expert like Real Property Management Traditions, he would have gotten a detailed market assessment before buying the property. He would have identified the property’s market value from the start, which might have made him change some of his decisions.
A professional Agua Dulce property manager would have also given Kleyman the names of trusted remodeling and repair vendors in his area and would have checked in with those vendors from time to time, greatly lessening the probability that the contractor he hired would take his money and run. Lastly, the team would have accurately priced and marketed his new property for him, searching for quality tenants willing to pay a competitive monthly rental rate for as long as Kleyman desired to retain the home. The value of this information and support is tough to overstate – it could mean the difference between an effective house flip and a flipping nightmare.
With local property management on your investment team, you’ll have the assistance of experts dedicated to making every one of your properties one of the finest long-term investments you can make. For more information, contact us online today.
Originally published on July 12, 2019.
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