If you’re looking to get into house flipping you’ve probably already read all the “How-To” books, googled countless Internet articles, and watched every HGTV show known to man. You know all the things that you should do, but what about things that you need to stay away from? Here’s a quick look at a few things to steer clear of as you start your house flipping career.
Going in Without Cash in Hand
While there are increasingly more alternative lenders offering house flippers loans with higher and higher LTVs, these will come at a cost: higher interest. While the interest that you pay is tax deductible, you don’t want to get in a position where you’re paying massive amounts of interest every month. It’s important to not go into this venture without having enough cash on hand to minimize the debt you will have to take on. Be sure to do some extensive research on financing options.
Going in Untrained
There may be some home renovation products that you’re capable of doing. If that’s the case, you’re doing well! But if one of your plans for saving money and maximizing profit margin is to do all of the work yourself, you need to avoid houses that need more work than you’re capable of doing. If you know how to install new floors but have no idea how to hang dry wall, you may not want to purchase a flip house that’s going to require new walls and a layout change throughout. Don’t overestimate your abilities.
Going in Too Quickly
Don’t get so excited to get into house flipping that you throw a generous offer at the first potential home you run across. You’ll end up paying more than you want to pay up front or buy something that is too far gone for your funds to fix. Good investors wait on the market to present them with the perfect opportunity. House flipping is a marathon, not a sprint.