10 Common House Flipping Mistakes to Avoid as a Beginner (VIDEO)
Flipping houses requires a certain level of risk tolerance to be able to stand the pressure involved in dealing with large amounts of money. Houses aren’t cheap, ok, maybe we’ve proved that they can be, but relative to other investments, you are most likely risking a large sum of your own or someone else’s money. Tough decisions have to be made when purchasing an investment property and through the process of getting it fixed, flipped, or rented. If the wrongs decisions are made, thousands of dollars could be lost, sometimes tens of thousands or more.
1. Real Estate Flipping Houses
Managing the risk is no easy task, but it can and must be managed and minimized. I don’t say all of this to scare you, but rather to let you know that we all deal with this fear when getting started. This fear keeps most people on the sidelines. For those of us that have worked through several deals, we must keep a level head and not get overconfident. The moment we write off the risk and assume that we can do no wrong is the moment we set ourselves up for a big fall.
2. Take Smart Risks
People are different when it comes to how much risk tolerance they naturally have. Some can go out and sign up a contract on a house without a second thought, while others need to analyze every single thing that could possibly go wrong. There is a balance and a middle ground that needs to be achieved. This difference in people’s level of risk tolerance needs to be understood and appreciated so that we can move forward to getting all concerned on board, with minimal stress. If your significant other has trouble accepting the level of risk involved in flipping houses, there are several things that can be done to try and help them cope and develop a tolerance.
3. Determine Your Flipping Goals
This is very important. If you do not have shared goals, you need to stop everything you are doing and write down where you and your better half want to be and what you want to do. Get excited about it and really feel the energy this provides. Without a specific reason to do something, you will not likely succeed because the amount of work and risk involved will require a lot to overcome. The strength to do so comes from knowing that you will be rewarded with what you really want.
4. Be Specific
Avoid saying that you want to be rich. Specify an amount and how soon you want it. Do you want to travel the world? Where exactly do you want to go? Make some concrete goals, write them down, find pictures and print them out. Take all of this and periodically talk about them, think about them, and keep them in mind when things seem difficult or impossible.
5. Become Members of Your Local Real Estate Investing Associations
Meet other couples and ask them about what they’ve gone through and how they’ve coped with it. I don’t just mean to study all there is to study about flipping houses. You must be prepared by having the resources to handle what you are getting into. I’ve heard of people quitting their day jobs after attending a real estate investing seminars and having never done a deal. This scares the heck out of me. What were they thinking? Paydays can be few and far between in this business, of course, each payday has a very real possibility of being close to what a lot of people make in an entire year.
6. Build a Good Flipping Team
Build a good team that can help answer questions for you quickly and that have your best interest in mind. You can find quality attorneys, Realtors, title companies, contractors, and others by talking to other investors and getting their recommendations.
7. Build Relationships With Successful Investors
This mentor will help you to avoid mistakes that you may not have considered. They can help you the moment something pops ups. You are the one calling the shots and making the decisions, but all successful people have people that they get advice from to help them with those decisions. You don’t have to be totally alone in this.
8. Start Small And Build From There
I don’t recommend quitting your day job until you’ve proven that you can consistently profit from flipping houses. Make some money with less risk by trying the following methods of profiting from real estate. This way you can show your significant other that what you are proposing and doing really does work and can require little risk. It would be hard for anyone to not be on board after you show them the quick money you could end up making.
9. Many Investors Start by Birddogging Leads to Other Investors
This is where you market for motivated sellers and pass the leads on to investors that have the ability to buy the houses. Usually, this is set up where they pay you if they buy one of the houses. This is typically anywhere from $500 up to $2,000 and more. This is a great way to gain experience with little money and no risk. You will quickly learn what a motivated seller is and see which ones the investor ended up buying so that you get a good idea of which leads to spending time on.
10. Build Relationships With Construction Workers
The core of flipping houses is removing old parts of the house and upgrading them to modern designs. Unless you have years of construction work background you will need a trusty construction worker (handyman). A good construction worker can save you a lot of money on materials and time. Even though you always want to follow local housing and building codes there are ways to get a job done for cheaper.
Flipping houses isn’t all about making a quick buck but making a home a saver and better place so future families can enjoy.