Rules of Renovation Reviews: What Not to Do When Flipping a House

There’s a lot that goes into flipping a house, including time, energy, emotions, and of course, money. Although you may not be able to cut down on the first three, you can always save money with the right strategies. Learn how to save money when flipping a house with these three common mistakes to avoid. Practice the following to build the discipline and habits necessary for a profitable house flipping business.

1. Don’t Get Too Emotionally Invested in Any Single Property

Your business success as a house flipper will come from the average profit you can make from a multitude of properties, not from any one property. It’s vital to treat each property objectively, judging it on its numbers, potential profit, market comps, and so on.

Try not to get attached to any one property. We’ve seen too many investors spend far too much time or take extra risks on a property just because they feel passionate about it.

Remind yourself that it’s important to sell each property quickly and move on to the next one; otherwise, the value will begin to diminish if you hold on to a property for too long. One property could gobble up the resources you could be using on several other small flips.

2. Thorough House Inspection

When new investors get too emotionally invested in a property, they don’t stress-test it as thoroughly as they should. Stick to a predetermined process for vetting the potential of every single property, no matter how exciting it seems.

Use a full inspection to find if there are any major problems that will require expensive renovations or repairs. Add up the costs, and dispassionately look at the numbers. If the cost of repairs will make the property unprofitable, move on. Find another property that better fits the profile of your ideal property.

If the numbers look bad, don’t hold on to a property because of an initial gut feeling of excitement. Expect that even more unpleasant surprises will appear during the repair process, which could double your estimated costs.

You can improve the average profit of all your properties by moving on from a problem property, or you could lower your average by sticking with it. It’s up to you.

3. Don’t Neglect Neighborhood Research

It’s crucial to research and understand the neighborhood you’re investing in. Don’t buy a house until you have gone through a research checklist comparing it to nearby houses and gathering other data about the neighborhood.

The neighborhood will affect the types of renovations you should make and the potential profit you can expect from a house flip. Only install certain upgrades to a house if you understand how they compare to similar features of the houses in the same neighborhood. Don’t make your house stick out in a negative way.

On the other hand, you can make upgrades that are just a touch superior to nearby houses that are for sale. Be memorable, and stand out from the competition.

Finally, make sure you know how much you could sell a house for based on a realistic assessment of the comps for the neighborhood, and don’t assume you’ll get the best price. Be conservative. Of course, if the necessary repairs and renovations would raise your total costs above that potential sale price, cut back on renovations or skip that property entirely.

Learn to Invest Smarter with Rules of Renovation

If you want to learn how to save money when flipping a house and get other tips on real estate investing, sign up for a free Rules of Renovation event in a city near you. We’ll teach you the fundamentals and put you on the path to becoming a master house flipper.