House flipping in Westmoreland County is quite simple: purchase a bargain property, conduct a bit of remodeling, and then sell it for a much higher price. There is no question that house flipping has provided a lot of returns to many investors across the country. But flipping houses also involves a high degree of risk; a flipping project can easily transform into a nightmare if you are not cautious. If you want to try your hand at flipping houses, avoid the following mistakes, or you might find yourself in a real flipping nightmare!
Over-Improving the Property
One of the most common mistakes that can easily turn a house flip into a nightmare is not understanding how much to improve the property. In particular, new house flippers typically go too big in renovations, spending far more than they need. Overspending can lead to budget complications and cause you to lose profits when you sell. Unless the property you bought is in a very high-end area, you don’t need 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 case 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 some time, this problem could be more likely to occur. 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 showed up at the house to discover that the kitchen cabinets had been stolen right off the walls. A dishwasher and a refrigerator also vanished. Because the property was in an area with few security measures and a low police presence, there was little Sankar could do to re-claim 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 instance, house flipper Daniil Kleyman in Richmond, VA, secured a project house for what he assumed was a good deal. An experienced investor, he did a preliminary market assessment on the property and estimated that he could remodel and sell it for five times his cost. Unfortunately, Kleyman made a series of bad decisions 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 doing the task he was hired to do, but Kleyman had also applied the wrong comparable properties when estimating his post-remodel sales price. 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 renovating the damage and replacing the stolen appliances and fixtures, Kleyman was eventually able to sell the house at a loss to an indifferent buyer.
Avoiding Flipping Nightmares
Stories like these reveal a couple of challenges that come with flipping houses for resale. These investors would have performed far better if they had accurate market data, proven construction professionals, and the expertise of property management professionals from the beginning. In Kleyman’s scenario, in particular, by first contacting an industry expert like Real Property Management Regions, he would have obtained a detailed market assessment before getting the property. He would have determined the property’s market value from the outset, which may have caused him to reconsider some of his judgments.
A professional Westmoreland County 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 regularly. This would have greatly reduced the likelihood that the contractor he hired would take his money and run. Finally, the team would have accurately priced and marketed his new property for him, locating quality tenants willing to pay a competitive monthly rental rate for as long as Kleyman wanted to keep the home. The value of this information and expertise is hard to overstate – it could mean the difference between a good house flip and a flipping nightmare.
With local property management on your investment team, you’ll have the aid of experts dedicated to making every one of your properties one of the best long-term investments you can make. For more information, contact us online today.
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