House Flipping No No's

flip_it_fast · #1 02-07-2009, 04:17 AM

There is still money to be made by flipping houses. It's not quite as simple as it used to be. (Not really simple, a little simpler maybe) You just need to be very careful of the choices you make while going through the process. Here are some big house flipping no no's to avoid.

Not paying a down payment. Always pay a percentage down payment. If things go as planned, you will get your money back with the sale.

Not having a plan. Decide what you are going to do before you make the purchase. You want the property to be in your hands for a short amount of time. If you go in with a plan ready, you will make a quicker sale.

Not shopping around for contractors. Get several bids from contractors for the work that you cannot do yourself. Also, get everything in writing including a timeframe for the work to be completed and penalties if it is not.

Houseflipping is a risk no matter what you do. You have to be willing and able to take that risk before jumping into this.

badmomma · #2 02-18-2009, 12:37 AM

I have to also suggest that you have your contractors checked out first. You don't want to use one who is in constant violation of the law. You also want to make sure that they have a valid license.

If they haven't taken the time to keep their license up to date can you imagine what they might skip while doing your work for you. I certainly wouldn't risk it.

closer · #3 02-23-2009, 12:55 PM

I believe you should alway have your investment inspected as well.

My neighbor bought thier mobile home, didn't have it inspected, and they have had more problems then just about anyone I know.

The first week they moved in, they had electrical problems. The roof leaked. They had to replace the hot water tank, and so on. In the end, they would have saved alot of money if they would have just got it inspected.

flip_it_fast · #4 02-25-2009, 02:28 AM

Thats a really good point Closer, and a very important one too. The last thing you want to do is to buy a house, move in and then begin discovering all of the problems hidden within! Always hire an inspector!

JaredfromIndiana · #5 03-25-2009, 07:29 PM

Not paying a down payment. Always pay a percentage down payment. If things go as planned, you will get your money back with the sale. <~~~ You can't get a loan today with no money down. It just doesn't exist anymore. Lenders are requiring investors to put at least 20% down in most cases. That's a big reason there isn't near as much house flipping going on now.

Not having a plan. Decide what you are going to do before you make the purchase. You want the property to be in your hands for a short amount of time. If you go in with a plan ready, you will make a quicker sale. <~~~ Time lines are key. Sticking with them is hard to do sometimes but you need to get that sucker fixed and on the market QUICK!

Not shopping around for contractors. Get several bids from contractors for the work that you cannot do yourself. Also, get everything in writing including a timeframe for the work to be completed and penalties if it is not. <~~ This is one of the biggest reason I don't do flips anymore... bad contractors.

I believe you should alway have your investment inspected as well. <~~ We always made our offers contingent on inspection. Once it was accepted we would have a pro home inspector come in and check everything out. We get the water and gas turned on for a day to make sure everything works. Great idea!