13 House Flipping Mistakes to Avoid

Newbies aren't the only ones guilty of these... 

Flipping houses can result in time freedom, energy freedom, a really fun life, and financial security. It can also cause you to lose money, if you just decide to go all “willy nilly” and figure it out as you go. You’ve got to have plans and processes in place in order to control the things you can actually control in a flip. 

And if something out of the ordinary comes up, you better know who you’re going to for help before you actually need it. 

My goal for your first flip is to do it in a way that makes you want to do another one, and another one, and so on. 

In other words, to do it in a way that: 

  • minimizes your risks
  • maximizes your profits
  • doesn't add unnecessary stress to your life
  • feeds your passion for houses and creating
  • and brings you a crap ton of joy (that's not asking too much, huh?)

By avoiding the following mistakes, I wholeheartedly believe that you will check off all of those items. 

Be smart. Make good choices. And don’t listen to people’s opinions unless they’re actually out there successfully flipping houses!

 

When Buying


1. Ignoring the Nuances of the Neighborhood


If I had a dollar for every time someone has asked me for my opinion as to why their flip isn’t selling for the price they’re asking . . . I’d have a nice stash of dollars! Ha. No, but really.

You cannot assume that equal houses (for example, both are 3 bedroom/2 bathroom/2-car garage/single story/around 1500 square feet) will sell for the same price JUST because they are in the same neighborhood.

It doesn’t work that way, y’all. 

Because what you aren’t taking into consideration is that one of those properties is on a double-yellow lined street, right next to a daycare. 

The other house is in a quiet cul-de-sac.

Which house will sell for more? Exactly.

You’ve got to use your smarts. You cannot invest with just superficial, or surface-level, information. 

9 times out of 10, that’s exactly why the person who has called me for my opinion has a house that’s sitting on the market. They’ll eventually have to drop the price by a significant amount or hold it as a rental until the value catches up to it.


2. Not Using the Sniff Test


What the heck is the Sniff Test, Debbie!? The Sniff Test is one of the steps my students learn, and the point of it is to avoid making bad purchasing decisions. 

When you go look at a potential flip, you can’t look at it in a vacuum. Meaning, you have to look at everything going on all around it, and on the way to it. 

Do the neighbors have cars parked in the yard? Does their house have a ton of deferred maintenance? Are the streets immediately leading up to the subject property well maintained? Is there a ton of highway noise? Is there a fire/police station nearby? Does the street have double-yellow lines (as in, it’s a busy street)? Is the street a cut-through that tons of cars use each day?

These are just some of the things you MUST consider when analyzing a potential house to flip.


3. Not Buying Title Insurance


This is just such a bad bad idea. It usually costs me around $1800, and it saved me $65,000 on a property where the title company made a massive mistake. It was a total fluke that it happened and is too long of a story to go into for this article, but just know that you are taking a very not-smart gamble if you choose to forego the title insurance.

Just make good choices and buy the insurance.


4. Trusting Your Untrained Eye Instead of Calling a Professional


For your first flip (and likely your first few), do NOT purchase a property that you have not walked through with either a contractor or a house inspector.  

Unless you are trained in construction or real estate, and you know how to look at the electrical box and electrical wiring, and HVAC system, and plumbing, and and and . . . just be smart and have trained professionals look at the property to give you a realistic rehab estimate.

In time and with a ton of practice, you will be able to look at all the right things yourself and calculate your own repair estimate.


5. Shortchanging the Rehab Estimate


Again, until you are trained at this, you need to walk the property with a contractor to get an accurate estimate. 

When determining the rehab estimate, you simultaneously need to be looking at the comparable sold properties. The sold comps will dictate the level of finish out required to hit the goal sales price.

 

6. Using a Pie-in-the Sky ARV


When determining the After Repair Value (ARV), there are several factors to consider:

  • the level of rehab needed to achieve the goal ARV (based on the comps)
  • comparing apples to apples when looking at comps in the neighborhood (same property criteria, same schools, etc.)
  • understanding the nuances of the neighborhood

It is ALWAYS best to be conservative, but not so much so that you never pull the trigger on a property because you are being overly analytical. 

A clue that you're being way too conservative? You're turning down every single potential deal that comes your way, that you watch someone else flip for a profit. 


7. Not Checking the Permit History


Did you know that when you purchase a house, you are also purchasing its permit history? Meaning, if at any time there was a permit pulled on the property and it wasn’t properly closed out, you may be responsible for doing so. 

I learned this one the hard way, and I wasn’t even a rookie! Ha. Nobody had told me to watch for this, so that’s why I’m telling you. You get to learn from my countless uhhh “lessons”.

When Renovating


8. Cutting the Wrong Corners


When it comes to saving money on a flip, there are plenty of ways to do so without looking cheap or like yet another greedy house flipper (you’ve heard comments like that, huh?). 

For instance, I am a huge proponent of price shopping materials online. I often spend my spare time just looking around online and researching various materials to find the best current pricing. 

Choosing the wrong rooms to skimp on the budget, is another wrong way to cut corners. Always make the kitchen, bathrooms and master (the Big 3) your top priorities, and in that order. 

Let’s say the roof is functioning perfectly, it just looks a little worn in places and you decide you want to replace it even though you hadn’t budgeted for it. By spending this money here, you have to reduce elsewhere. If that causes you to skimp on the Big 3, you’re going to face some problems at resale.


9. Ignoring the Details on the Finish Out 


Oh man, you know what one of my pet peeves is? Flippers who are not mindful enough to pay attention to the details – the “little” things that you some think don’t matter, and I can promise you they make a HUGE impact on prospective buyers.

One of these is not carrying the shower/tub surround tile all the way to the ceiling. It costs, what, another $50? And it makes it look 100 times better and more high-end than those flippers who just end the tile 1-2 feet below the ceiling. 

Since we’re already in there, let’s do another bathroom detail you should not miss. If you’re renovating a house that’s pre-1990ish, please have your plumber raise the showerheads to the appropriate height. Again, it just makes the shower look high-end versus someone having to hunch over to fit under the showerhead.  

My final example is not caulking the baseboards. Just. Caulk. The. Baseboards. It will look unfinished otherwise. 

These are just three examples of the many ways to make the details work in your favor. I promise you that buyers are looking at these things. My houses sell faster and for more money because I care about delivering a quality product, and yours can too.


10. Using "Fuzzy Math" to Account for Unplanned Expenses


Something I hear even seasoned flippers say (perhaps they haven’t been caught on this yet, but their time is coming) is it’s okay if you blow your rehab budget, because you can just raise the sales price to make up for it. 

Oh, hon. It absolutely 100% does not even come close to working like that. Even if the changes you decided to make that weren’t accounted for in the original budget are really wonderful, the ARV doesn’t change based on this. The ARV is the same one you came to when you purchased the property a couple of months ago. 

Please do not fall into this way of thinking. I see many houses languish on the market for this very reason. 

Buyers do NOT care what sales price you need to make in order to break even or make a profit. They don’t care! 

The only thing that dictates your final sales price are the quality and level of your finish out and the recently sold comparable houses.  


When Selling


11. Skimping on the Photography to "Save" Money


All other things being equal, the way the house looks when someone first comes across it - which is usually online - determines whether or not they want to see your flipped house. 

Also, don't ignore the landscaping. This doesn’t mean you should go all out with it. Don’t do that because you won’t get all of that money back. Plus, it all may just be dead when you drive by a few months after you sell. 

Additionally, while the house is on the market, keep the yard watered and mowed, and flowerbeds free of debris.

A nice yard will help with the curb appeal tremendously. It's all about that first impression!

Trust me, I tried doing the photography myself, because surely I'm capable of it...

No. I'm not. I quickly learned that I would rather pay my photographer $125 for 40 images and a virtual tour than to lose thousands on the sale because of first impressions. 

12. Not Staging to "Save" Money


Remember earlier how I said that buyers notice the details? Well, don’t stage your flip and you’ll see what I mean.

Actually, don’t try that. Just stage your flip. 

Why?

  • People buy homes, not houses. Empty properties do not feel like homes. 
  • Our eyes need something to latch onto, and of there isn’t furniture to entertain our eyes, we will scan the details and find everything you skimped on in your flip. 
  • People have trouble visualizing how they’re supposed to fit their stuff into a space.

I pay my stager around $2500 per house, and I am certain that I make at least $10,000 more on the sale because of his amazing talents. 

Look, if you've got the skills to do this yourself, then go for it. But do not skimp and just throw up some cheesy accessories. It doesn't work like that.


In General


13. Not Acknowledging You Don't Know What You Don't Know


There is so much to know about flipping houses, and each project brings its own lessons. It is rare for a project to go exactly as planned, and that’s actually the fun part for me. I love puzzles and figuring out the best solutions to issues or problems.  

When I first started flipping, I joined a mentoring program because I admitted to myself after 5 years of stubbornly trying to figure it out on my own, that I needed a proven process to follow and someone to turn to when problems arose that I didn’t know how to handle. There will always be something new to learn and a new problem to solve. 

Find an expert you resonate with in order to start your house flipping business in a way that is sustainable, profitable, and fun. Because flipping houses – and the freedom that comes with it – is a total blast, y’all!

I know you're scared.

  • You don't want to screw up 
  • You don't want to lose money
  • You don't want to make costly mistakes 
  • You don't want to look like a fool

However, overanalyzing properties so that none of them ever meet whatever incredibly high standards you’ve declared to be necessary, so that you don’t actually ever have to move forward on anything (because that’s super scary), will not get you where you want to go. 

There’s a fine line between being smart and talking yourself out of a solid deal because you’re scared.

As you prepare to find and complete your first flip, remember that the whole point is to do your first flip in a way that makes you want to do a second flip, then a third, and so on. But you have to actually DO A FLIP.

Flip smart out there.

Over to You

I hope this post leaves you feeling more informed and ready to kick start your own house flipping venture! If you have any questions or encounter difficulties when trying to implement this strategy, let me know by scrolling down and leaving a comment!

Debbie DeBerry | The Flipstress

I've been in real estate in Austin, TX since 2003, involved in 500+ transactions, from traditional brokerage to rentals to flips, and everything in between.


I am The House Flipping Coach for Women, and teach you how to start and grow your house flipping business, the smart way. 

So that you can contribute to your family.

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