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Real estate is a game of utter patience and taking a leap of faith when taking big decisions. Invest in the right property, renovate it well, and you can get brilliant profits in future and stable returns in the short term.
But there is a widely popular and often highly profitable way to make money in real estate: house flipping. In short, house flippers purchase a property at a low price, renovate it and add value, and sell at a higher price to earn a profit. If done correctly, the returns are great.
However, as attracting as it may sound, it is not easy to execute. Many people get into this business but pull themselves out. Here are the five mistakes pointed out by a seasoned property mentor in Preston which you should avoid when flipping a property.
1. Poor Budgeting
Beginners often miss the basics i.e. budgeting. The purchase price of the property isn’t the only cost they have to allocate. Being unaware of the renovation costs and other unseen expenses leave them with lack of money and they are not able to complete the project. Poor budgeting is one of the biggest mistakes an investor can make.
2. Not Allocating Enough Time
Every business requires a certain amount of your personal time and attention to build and progress. The mistake we often see from investors is not allocating enough time to complete the project. Poor time management can lead to poor quality of the project and a lower sales price. It’s necessary for a property to complete in the given time to keep the expenses low.
3. Insufficient Research
Before stepping foot into the market, the real estate investors should educate themselves about the ins and outs of the market and must exercise due diligence in researching:
- Finance of the property
- Property location
- Rehab of the property
- Resell of the property
4. Working With the Wrong Contractor
Choosing the contractor for a flip is one of the most important decisions you’ll have to make. A good contractor will help you eliminate headaches, save money over the course of the project which results in a profitable bottom line. A reliable general contractor (GC) works as a single point of contact, which leaves you with enough time to simultaneously flip multiple properties or look for any other deal.
5. Failing To Stay Organized
House flipping is a challenging business, so it’s important to carry out every decision and take every step in an organized way to maximize profits. If you use a general contract, he will keep the whole process organized and will make easy for you to manage time. However, if you can’t afford to hire a contractor, you can use a project manager to coordinate the rehab process and be on site for a timely update about the progress.
You will face many challenges and hurdles in real estate investment, but educating yourself about the process and applying that knowledge in the field will help you overcome the problems. Stay updated about the current market conditions and work your way through. If you need professional guidance, you can get in touch with any of the reliable investment advisor in Preston at 10 Properties in 10 Years. Contact us at +61 452 238 490 or leave us a message at [email protected].