3 Killer Mistakes To Avoid When Flipping Houses

Cindy and I have never gone a few months over the past decade that someone didn't tell us we couldn't quick turn houses "in this market" for a profit. Doesn't matter if it was a seller's or a buyers' market.

And each year, I answer, "Maybe so", or "Hmm, could be", as I wait for our latest escrow check to arrive.

You will never hear that statement come out of my mouth.

This being said, I will say that flipping in a declining market does sort of remind me of learning to snowboard on a black diamond slope. In 2002, 2003, and 2004 if you had started flipping then it was more like learning to ski or snowboard on a bunny slope.

If you had a major repair issue or other problem you didn't account for, rising prices bailed you out every time from 2002-2004. Leased land, floor-plans that resemble a labyrinth, war zones, glop ons (really bad add ons), overestimating value, underestimating repair and carrying costs, taking 3 months longer than you thought to make your repairs...all of these sins were quickly forgiven by the voracity of the market.

In this market, if you commit these sins, you can and will be punished, "Thank you sir, may I have another?!"

Right now, it is raining foreclosures. You have to be spot on...spot on with your rehab, spot on with your repair estimates, and one of the most important factors, aggressive in your marketing of the property...in other words, you better have some idea of what you are doing.

If not, the risk is that in the time it takes to fix up that property, 3 or 4 new foreclosures go up on your street that are priced $50,000 below the last lowest priced property. There is a LOT for a buyer to choose from.

Without espousing all gloom and doom, there is still a SHORTAGE of freshly remodeled homes out there. Even more excitiing than that, every month more and more families can afford a home who could not for the previous 5 years (and chance are their families are bigger!).

There is a lot to be excited about...but you have got to be focused, you have to be accurate on your repair costs and timetable, it has to look GOOD (or why wouldn't a family save $50k and pick the REO across the street?)...

You need to get creative and put something like a plasma HD flat screen with an Xbox in the living room, a spa in the backyard, or something that makes a family emotionally attached.

You need to make the property enticing to agents and add at least 2% to the commission of the agent or a free trip to Catalina Island (not as pricey as you might think) for the agent who finds you a buyer......You mustn't neglect these costs!

if you are eager to take the plunge, you must tune out all naysayers!".

Really, no matter how much advice we or anyone else gives you, the only way to get to consistent success is to get that pesky falling-flat-on-your-face part out of the way...I am just not sure of a way around it. It is the only way to get a deep understanding of the game the same as any other hobby, business, or sport. You can read hours of books and videos about snowboarding, it's not going to prevent you from feeling like a complete jackass the second you click your boots in and try to stand up!

This doesn't mean you will have an unmitigated disaster, it does mean that at the end of each project if you don't slap your forehead at least once and say, "Dohh, I should've", or "I could've", or "Why did I....?" then you didn't really learn anything, and there is ALWAYS something you could have done better.

........hey!....imagine how easy the rest of your snowboarding or skiing trip will be when you do learn how to get down a double black diamond!

If you don't like snow up your nose, and you want to take a more balanced approach, then I have another suggestion for you: consider wholesaling. The money can still be great and the risk is considerably less.

Again, CONSIDER WHOLESALING. The money can still be great and the risk is considerably less.

Don't let current market conditions dissuade you from really "going for it". Take action.

Wholesaling means you go on the hunt for amazing deals, but then you take what amounts to a small finder's fee, pass the lion share of the profit to another investor, and go on to the next one.

Make sure you continue to learn what the investor does - especially if they make money. Who knows? ...you may just get hooked on the thrill of the hunt and never even care about fixing them up.

I'm torn between the two. The feeling you get when you take a trashed, smelly, abandoned pile of wood and turn it into a beautiful home....there is no feeling like it. No matter how many times we've done it, my jaw hits the floor when I see the work my brilliant and artistic wife pulls off time and time again..

....BUT, for me, I'm all about the fun of the treasure hunt. I'm not a fix up guy. I tried to put in a doggy door once. The box said 15 minutes. It took me two hours and put me in a really bad mood, and Cindy basically redid it anyway...sorry, I just suck at it. I admit it. But if you want a direct mail marketing system to absentee owners or a screening system to find the best repos fast, stand back!...Cindy often struggles with email....if we were good at the exact same thing we'd be in big trouble.

But the number one reason is risk...no repair costs at stake, no mortgage payments, no agents and picky end user buyers to deal with...if you are bound and determined to get out of your job, don't have a lot of money, and not a lot of contractor experience, give wholesaling a serious thought to launch your investing career....... just don't try and add a doggy door, it's impossible.

Be Happy and Prosper,

Kurtis

Article Source: http://www.contentspool.com

Kurtis and Cindy Squyres have rehabbed and flipped close to 300 properties over the past decade. Kurtis and Cindy both left thriving careers in other industries to pursue real estate full time, and love what they do. Now, with 4 young children, they still "fix and flip" occasionally, but have shifted their business more towards helping other investors succeed by find them deals wholesale and teaching real estate investing. www.FarBelowMarket.com

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