House flipping in Eagle Rock sounds like a basic concept: purchase a bargain property, do some remodeling, and then sell it for a much higher price. There is no doubt that house flipping has brought a lot of returns to many investors across the country. But flipping houses also involves a high degree of risk; a flipping project could turn into a nightmare in a hurry if you aren’t careful. So, if you want to try your hand at flipping houses, avoid these common problems, or you might find yourself in a real flipping nightmare!
Over-Improving the Property
Not recognizing how much to improve the property is one of the most frequent mistakes that may rapidly turn a house flip into a nightmare. Particularly, amateur house flippers usually go too big in renovations, spending far more than they need to. Overspending can lead to budget difficulties and decrease potential profits when you sell. Unless the property you bought is in a very high-end area, there is no sense in going 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 time, it may be more exposed to these issues. House flipper Carol Sankar of Charlotte, NC, describes one project in which the home was burglarized multiple times during the remodel. One day towards the end of the project, she returned to the house to discover that the kitchen cabinets had been stolen right off the walls. A dishwasher and a refrigerator are also gone. 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 blunders. For example, house flipper Daniil Kleyman in Richmond, VA, procured a project house for what he did think was a good deal. An experienced investor, he did a preliminary market assessment on the property and thought he would be able to remodel and sell it for five times his cost. Sad to say, Kleyman made a series of failures that led to losing money on the flip.
Not only did the first contractor he selected walk off the job with his money and without finishing the work he was hired to do, but Kleyman had also chosen the wrong comparable properties when estimating his post-remodel sales price. He had to list the property for far less than he had hoped. And then the property was burglarized, stripped to the walls, plumbing broken, and flooding in the basement. After repairing the damage and replacing the stolen appliances and fixtures, Kleyman was eventually able to sell the house at a loss to a buyer who wasn’t interested in it.
Avoiding Flipping Nightmares
Stories like these showcase a few of the difficulties that come with flipping houses for resale. These investors would have significantly benefitted from accurate market data, proven construction professionals, and the expertise of property management professionals in the early days. In Kleyman’s circumstances, specifically, by first talking to an industry expert like Real Property Management Vision, he would have collected a detailed market assessment before getting the property. He would have been aware of the property’s market value in the first instance, which could have caused him to alter his initial plans.
A professional Eagle Rock property manager would have also presented Kleyman with the names of trusted remodeling and repair vendors in his area and would have checked in with those vendors once in a while, greatly lessening the probability that the contractor he hired would take his money and run. Ultimately, the team would have accurately priced and marketed his new property for him, attracting quality tenants who were eager to pay a competitive monthly rental rate for as long as Kleyman wished to maintain the home. The value of this information and professionalism is hard 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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