The Eight Most Common Mistakes for First-Time House Flipping

House flipping is a potentially high profit but also labor-intensive career. You can flip one house or dozens. The key is to choose homes that have their value artificially lowered by surface damage and outdated design, then invest a modest amount to sell the house for more than you spent on the purchase and upgrades. A good flip can leave you with tens of thousands in profit. A poor flip might leave you financially behind where you started.

Your first flip might be an investment property just purchased or even an inherited home you’d like to sell after a few updates and renovations. However, be careful. Flipping is a business for the careful, experienced, and handy. To make a profit, you’ll need to accurately measure the current property value, the fixed-up property value, and how much it will cost to renovate that difference. So it’s no surprise that first-time house flippers sometimes make mistakes.

Here at Center Street Lending, we’ve worked with hundreds of flippers and we know more than a little about first-timer mistakes. Let us help you avoid those mistakes with your first flip by spotlighting the eight most common mistakes made during first-time flip projects.

1) Skipping the Inspection & Overlooking Expenses

Never skip the inspection when buying a property – especially if you’re planning to flip. You need to know every maintenance detail from the thinning roof tiles to the cracking driveway pavement. Some issues can be overlooked, some you’ll spruce up, and some should be clear deal-breakers.

Watch out for foundations, roofs, and mold. These are the three most common problems with old homes that are both hidden and very expensive to fix. Structural damage, especially water damage, can make a home too unstable or delicate to renovate. Critical system failures like plumbing and electrical issues should also be examined.

While you may be able to repaint and install new molding easily enough, don’t bite off more than you can chew by accident. Careful and professional inspections can help you avoid lemons that will cost more to update than you are ready to invest.

2) Upgrading Too Much

Flipping a house is an exciting experience and you may be eager to see the home renewed to its full glory. But don’t over-renovate. Remember that your upgrade budget balances your profits. The more you spend on upgrading, the less you’ll make in the final sale. After a certain point, renovations hit a ‘point of diminishing returns’ meaning your ROI reduces after the house is nice enough to live in comfortably.

Small touches like paint and molding are essential. But don’t go overboard with a luxury kitchen or an ornate deck unless it fits neatly into your budget and reselling plans.

3) Designing with Your Personal Sense of Style

Renovating a home by hand feels very personal and many first-time flippers use their own sense of style to make the house “look good”. However, selling a house is an artform of neutrality. Neutral tones and fill-this-blank designs are what beckon buyers. Your own sense of style may be inspiring and when you’re renovating your own house with your flipping skills, you can go wild. For flipping, however, you want to design for the buyer.

It helps to remember that buyers are looking for a new home, a new place to write the next chapter of their lives. So a flipped home should feel welcoming and uniquely ready for someone else’s personality to be written in. Make your design like a blank canvas in a beautiful frame instead of a reflection of yourself.

4) Forgetting to Map Your Budget & Expenses

Flipping relies on a careful balance of investment, budget, expenses, and sale price. Your initial loan or investment will need to cover both the home’s value and the amount to be spent on renovation costs. Then the final home’s sale price must cover your investment and more to make a profit. An organized flipping plan includes calculating the cost of each upgrade project and finishing touches, mapping expenses in contrast to your planned budget.