Flipping homes—the process of purchasing a home, remodeling it, and then immediately putting it back on the market—can be a way to quickly build wealth. Yet, it’s not without its risks and potential pitfalls. Every veteran flipper has a horror story of that “one” property they worked on, or can reminisce on the hard (and expensive) lessons they learned early on. Here are a few crucial mistakes to avoid when flipping a home.
Pushing a project past its initial scope
In a successful home flip, value-boosting home improvements must be carefully planned and balanced against both time and budget. A bathroom or kitchen remodel that goes over-budget or takes an extra week to complete could complicate the sale of your flip, cut into your profits, and delay other projects. A common mistake some remodelers make is adding too many items to their to-do list. Remember, the objective here is not to build your dream kitchen. It’s to do precisely what is absolutely necessary to maximize the value of the home and your return on investment.
Not knowing your limits
Inspired by the sledgehammer-slinging personalities on home remodeling TV shows, many first-time flippers enthusiastically embrace the physical part of the job. While a direct approach can cut your remodeling overhead, it can also potentially lead to disaster if you don’t know what you’re doing, don’t get the right permits, or overlook key steps. When an inexperienced remodeler tries to do too much, a critical plumbing mistake is only a matter of time.
It’s unrealistic to do everything yourself. Instead, divide your flip into two categories: projects you can complete and those that require you to bring in a professional. Plumbing, electrical, roofing, and HVAC upgrades should fall into the latter category, while laying flooring, adding backsplash, and painting walls may be things you feel comfortable doing yourself.
Hiring the wrong plumber for the job
Deciding to hire a professional is only half the battle. You also need to thoroughly vet out anyone you’re thinking about working with, to ensure that they know what they’re doing and that they have the professionalism and tools needed to complete the job. As many flippers have learned, trying to cut costs by taking the lowest bid can go very poorly, very quickly. Unfortunately, not all plumbers are trustworthy: some may pocket your downpayment and never show up, while others may be late or generally uninterested in meeting your deadlines. Inexperienced or unqualified individuals can make crucial mistakes or just not install things right, leading to profit-eating rework later.
To find the right plumber—or any pro—for a job, talk to other flippers in your area about who they’ve used and who they trust. A personal recommendation is a great starting point. If you’re unable to network in this way, go online and read reviews. Look for contractors who have prior experience working with flippers. No matter how you source your contractors, run all of them through a checklist of criteria. Confirm that they have proper licensing, insurance, experience, tools, and that they know how to submit permits for the type of remodeling work you’re doing.
This might sound like a lot of work, but it’s worth it. If you’re planning on flipping more homes in your area, developing a relationship with high-quality contractors can really pay dividends. It means you’ll be able to complete this project and others more quickly, with fewer problems. Ultimately, that’s what is going to drive a strong return on investment.