Fixing and flipping can be a wildly successful endeavor or a very frustrating one depending on how the project is handled. While there are many benefits for most investors, others may miss out on these perks because of certain errors that cost them their time, money, and energy. Here are some examples of the key things that real estate investors should avoid:
- Going over the budget – Overspending is one of the most common mistakes of investors who fix and flip homes for a living. Something every investor should remember when dealing with a property is cash flow. Will the increased spending on certain fixtures increase the property value by more than the increased cost? If the opposite is true we recommend reconsidering the extra expense.
- Deviating from the schedule – Along with money, time is one of the most significant elements in real estate investing. Time can be an investment itself which is why this is so important. Someone who does not know how to follow a work schedule will incur additional costs from financing and opportunity costs since they can’t yet start new ones.
- Trying to work on a project alone – Another common error made by fix and flip investors is relying solely on themselves to complete a project. People investing in real estate must remember that any type of investment in this field requires a good team and diverse skill sets.
- Not researching sales comps – Many investors will buy a property because it’s perceived as being a bargain. To ensure this is correct, investors should gather ample data and neighboring sales comps to figure a reasonable sales price before they commit to the property. This serves to set the construction budget and ultimately estimate the expected profitability from the project.
- Not having an exit strategy – Now here is another mistake that many real estate professionals repeat often in their career: neglecting to have plans or exit strategies. Keep in mind that exit strategies should be one of the first things an investor prepares when working on a deal.
Now that you are more aware of common fix and flip mistakes, you can be sure to avoid them. As a Hard Money Lender, we work closely with many Fix and Flip Investors across Texas and would be happy to assist you in your next project. Feel free to reach out to us with any questions on your next deal!