09 Nov 4 Mistakes To Avoid When Flipping Real Estate
It’s Only A Mistake If You Make It Twice
When we started flipping real estate, there were a lot of things that we didn’t know – actually most things we didn’t know. Our learning curve was steep. We had to learn local design trends, renovation costs, pricing, construction processes and so much more. Some people research these things for months or even years before pulling the trigger, but we knew the best way to learn was to just make the leap and get our hands dirty. By following the footsteps of others, we avoided a lot of mistakes, but sometimes, you still learn from the school of hard knocks. Here are four early mistakes we have learned from:
Curb appeal matters – always
People want the inside of the house to match the outside – shocking right? Every article you read and TV show you watch demands curb appeal. But what do they know? We were going to do it our way. WRONG! The first thing people see when they pull up to a house is the exterior. We learned that you don’t have to put tens of thousands of dollars into the exterior, but you do need to jazz it up to give potential buyers a warm and fuzzy feeling before they walk inside.
Windows may not make you money, but they can make a sale
I don’t know if anyone has a magical formula showing the return (or lack there of) that they get when they flip a house and replace windows, but we have found that it does make a difference in the sale of the house. When people buy a turn key property, they expect it to be exactly that – turn key. They walk into the house excited and jittery, high on emotion. If they walk in and see there are things they still need to change (windows), it brings them down off their emotional high. Buyers are emotional and you want to do everything you can to make them buy on that emotion. You may not need to change windows that are 20 years old, but if they are 100 years old, do yourself a favor and just swap them out.
People buy what they can see
Sometimes you want to do everything. You want to make the house brand new. That’s not a bad thing, but remember, buyers only pay for what they can see. Design adds value, and sometimes, all the value. Anyone can put in a furnace, add insulation, or build a garage. In some circumstances, you will need these things to make a sale, but don’t think you will make a return off renovations like that. People will pay you for what they can see – that’s it.
One quote pony
On our first projects we were “too busy” to get multiple quotes. We created a budget, got a quote, and as long as the quote fit the budget, we would go through with it. This has been the biggest lesson yet. We were getting bent! Paint, electrical, cabinetry, everything. We were accepting quotes at face value and if they were too high, we would cut something instead of getting more quotes or pushing back on trades. Currently, we get 2-4 quotes on every trade and it is amazing how the competition brings the real costs out of the woodwork’s!
Although we have learned a lot from our first handful of projects, we will undoubtedly continue to make mistakes. Every project is different and there are new challenges with each one. We don’t see mistakes as bad things, we see them as building blocks – we just try to make less and less of them over time. Mistakes can be scary, but they mean you are trying, taking risks, and learning!
“It’s only a mistake if you make it twice – the first time is just the cost of education.”
~ Sandy Blair