Fix And Flip Projects: Avoiding Common Mistakes
Almost every commercial real estate investor will agree that there is no such thing as a “typical” fix and flip project. Last minute costs, unexpected repairs, scheduling, and more can delay renovations, so commercial real estate investors should have contingency plans in mind to keep projects on track. For these reasons and more, we have put together a list of potential pitfalls you can avoid on your next fix and flip project.
Choosing The Wrong Fix And Flip Project
The ambitious house flipper will tell you that any property can be profitable. The experienced house flipper will tell you otherwise. Purchasing a house that has no appeal to buyers, paying too much due to bidding wars, or simply picking a nice home in a bad location can easily turn your finances upside down. There is no such thing as the perfect property, and you don’t need to jump on every property simply because it’s there.
Underestimating Your Expenses
Your fix and flip project needs to have a realistic budget. Underestimating costs can easily put you in the red well before you are finished with your renovations.
Biting Off More Than You Can Chew
Most house flippers take pride in their DIY skills. However, you have to know when to draw the line and call in a specialist. Doing the electrical work yourself may end up being more expensive in the long run, if you don’t have the background. Also, specialists will know how to keep the work to code.
Picking The Right Improvements
It is just as easy to skimp on improvements as it is to overspend on them. Cheap linoleum flooring will not attract any buyers, but that quaint Cape Cod doesn’t need gold and crystal fixtures, either. Ideally, you will want to spend money on improvements that will actually improve the value of the house. Fixtures mean very little, because homeowners can change those out at any time. Quality flooring, insulation, energy efficient heating and A/C – those all add value and ultimately increase your bottom line.
Make Sure You Have A Plan B
As we mentioned above, fix and flip projects rarely go off without a hitch. The more you dig into a project, the more you uncover, and usually, those turn into additional repairs. When determining your budget, increase the amount by an additional ten or twenty percent, to give the padding you need to unexpected costs.
If you want to learn more about financing your next fix and flip project, contact the experts at CounselPro Lending.