House flipping is a great way to invest in real estate, but it’s also one of the most complicated. A project like this has many moving parts and needs timing to pull off successfully. From buying, to renovating to selling, there are plenty of steps and details to consider, it’s easy to get overwhelmed and make costly mistakes.
For a successful home sale, you need to be organized and fully prepared. Avoid these 7 common mistakes sellers make when flipping a house:
Not enough research
Before starting your project, you need to research thoroughly. A successful house flip involves choosing the right property in the best neighborhood. Study local real estate trends so you can plan your flip accordingly.
Look into different neighborhoods in your target area and find out what potential buyers want in their home. There’s nothing worse than completing a home renovation only to find out that it’s not what buyers want.
If you’re eyeing the area, check out the real estate values in Los Angeles. Then, look into the specific neighborhoods you may want to buy a house to flip. For example, look at Studio City home prices so you can figure out how much you can spend on the reno while making sure you can sell the flipped home at a competitive price.
Also, you need to understand the tax and zoning laws involving your property flip. Check the regulations set by the Federal Housing Administration (FHA) and state rules.
Not including the cost of selling a house into the budget
Home flipping costs also include selling expenses such as pre-sale home inspections, closing costs, commissions, capital tax gains, and property tax. These costs could eat up a significant portion of your profit if you don’t plan ahead.
Ask your real estate agent about selling costs for an accurate estimate. Your agent will provide you all the information you need so you’ll know how much to set aside.
Also, include miscellaneous costs. Major home renovations don’t always go according to plan so you need to factor in the cost of delay.
Taking on more than you can handle
Sometimes investors become too ambitious with their house-flipping project. A home with a lot of potential could end up being a money pit.
Remember, the goal of this investment is to make the most profit while spending as little as possible. If a home is in a great neighborhood but in bad shape, for instance, then it’s probably not worth pursuing.
Under-improving the property
Minimizing costs shouldn’t come at the expense of the property’s overall improvement. It may be cheaper to focus on big-ticket items like walls, ceilings, and appliances. However, ignoring smaller aspects of the property like the light fixtures, cabinets, and molding can negatively impact the total appeal of the house.
For a house flip to be successful, the property should be improved from top to bottom.
Over-improving the property
On the other hand, over-improving a property is also a problem. When renovating a house, you don’t want to use materials and finishes that are over the top when compared to other homes in the area. This won’t be a problem in upscale neighborhoods because people expect these homes to use top-grade materials.
Look again at your research to make sure you’re adding amenities that potential buyers are looking for.
Not marketing it properly
Sellers often think that because their property is newly renovated, they can forego marketing – that’s not the case at all. If you don’t have a good marketing strategy, you’ll have a harder time selling your property.
Discuss your marketing plan with your real estate agent. Make sure you use online tools, as well as classic marketing techniques to make your property stand out. Your home should also be staged to sell and be professionally photographed for online listings.
Doing it all on your own
Flipping a home is a major investment opportunity you can’t just DIY. It might seem like you’re saving money by doing everything yourself, but it could end up causing more harm than good.
When it comes to house flipping, hiring professionals is a must. They’ll have the tools and expertise necessary to renovate a home, which will save you time, and by extension, money. Ask your real estate agent if they can recommend reputable contractors and designers. Or better yet, choose a real estate agent who has experience flipping homes themselves.
For more tips on selling your home, get in touch with expert real estate agent Arman Grigoryan. Since 2001, I’ve been helping sellers develop and design properties to flip. Start your real estate investment with me today! Give me a call at 818.770.2777, or send an email to arman(at)armangrigoryan(dotted)com.