Flipping houses seems like a quick way to make fast cash. However, there are pitfalls even seasoned flippers must overcome; as a novice flipper, the chances of flopping on your first project are even higher.  Below, we have highlighted common mistakes that new investors make with their flips.

Poor Time Management

House flipping can take a long time, longer than many first-time investors anticipate. Finding the right property and going through the sales process is time-consuming on its own. Add into that the actual time it takes to renovate, schedule inspections, list the property, and sell the house and you are looking at a significant time investment.

Before you decide to start looking for a property to renovate,  get a realistic estimate of the timeline involved and determine whether your profit margin is high enough to make the flip worth your while. Professionals in the industry understand that the margins are often very slim, and rely on volume, their industry contacts, and trusted partners to ensure that the job moves quickly and efficiently to maximize their profit.

Not Enough Resources

Real estate is an expensive industry; if you are not willing to spend the money on a quality flip, you will not recoup your costs. Even for low-cost properties and cash sales, expect significant expenses, including taxes, utilities, and projects that run over budget. All of these expenditures come directly out of your bottom line and decrease your already-thin margins.

Additionally, if you lack the skills to tackle most of the improvements yourself, you will need to outsource projects to professionals, reducing your profits even further. Ultimately, it is a lack of knowledge of the house flipping industry that will doom your project.

The Bottom Line

The best advice for any new house flipper is “do your research.” Flipping houses is a business and should be approached in the same way as you would launch any new company. Understand the costs and the skills required before you decide to turn house flipping into your next career. To learn more about flipping property the right way, contact JNI Commercial Lending today.