House flipping in Riverdale appears to be a simple procedure: acquire a bargain property, do some remodeling, and then sell it for a much higher price. There is no question that house flipping has provided significant returns to many investors across the country. But flipping houses also involves a high degree of risk; a flipping project can swiftly deteriorate into a nightmare if you aren’t equipped. If you’d like to try your hand at flipping houses, avoid these typical pitfalls, or you might find yourself in a real flipping nightmare!
Over-Improving the Property
One of the most common mistakes that can rapidly turn a house flip into a nightmare is not knowing how much to improve the property. New house flippers, particularly, regularly go too big in renovations, spending far more than expected. Overspending can lead to budget problems and losing out on profits when you sell. Unless the property you bought is in a very high-end area, it isn’t necessary to go too upscale. The best improvements will bring the property up to the level of the other homes in the neighborhood – but not too much beyond that.
Dealing with Property Damage
Another scenario that a house flip can become a nightmare is if you encounter vandalism, theft, or property damage. If a property has been sitting vacant for a long period, it may be more vulnerable to this issue. House flipper Carol Sankar of Charlotte, NC, describes one project in which the home was burglarized multiple times during the remodel. One day near the end of the project, she entered the house to discover that the kitchen cabinets had been stolen right off the walls. A dishwasher and a refrigerator were also missing. Because the property was in an area with few security measures and a low police presence, there was little Sankar could do to recover her stolen materials and appliances.
Costly Mistakes
A third situation that can make a house flip haunt you is when making expensive financial mistakes. For illustration, house flipper Daniil Kleyman in Richmond, VA, decided to buy a project house for what he thought was a perfect deal. An experienced investor, he did a preliminary market assessment on the property and assumed that he could remodel and sell it for five times his cost. Unluckily, Kleyman made a series of mistakes that cost him losing money on the flip.
Not only did the first contractor he hired walk off the job with his money and without finishing the task he was hired to do, but Kleyman had also utilized the wrong comparable properties when estimating his post-remodel sales price. He had to list the property for far less than he had wanted. And then the property was burglarized, stripped to the walls, plumbing broken, and flooding in the basement. After fixing the damage and replacing the stolen appliances and fixtures, Kleyman was later able to sell the house at a loss to a not interested buyer.
Avoiding Flipping Nightmares
Stories like these show a couple of the obstacles that come with flipping houses for resale. These investors would have benefited a lot from accurate market data, proven construction professionals, and the expertise of property management professionals from the beginning. In Kleyman’s case, particularly, by first working with an industry expert like Real Property Management Northern Utah, he would have gathered a detailed market assessment before buying the property. He would have understood the property’s market value from the outset, possibly affecting some of his decisions afterward.
A professional Riverdale property manager would have also offered Kleyman the names of trusted remodeling and repair vendors in his area and would have checked in with those vendors regularly, significantly lowering the risk that the contractor he hired would take his money and run. Lastly, the team would have accurately priced and marketed his new property for him, searching for quality tenants eager to pay a competitive monthly rental rate for as long as Kleyman wanted to maintain the home. The value of this information and assistance is difficult to overstate – it could mean the difference between a successful house flip and a flipping nightmare.
With local property management on your investment team, you’ll have the aid of experts dedicated to making every one of your properties one of the best long-term investments you can make. For more information, contact us online today.
Originally published on July 12, 2019.
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