Often as a house flipper, it’s easy to get caught up into thinking that any old house will be able to return a good profit, but this isn’t true for every house. While house flipping can be a profitable business and can provide a steady source of income, many flip deals can end up turning into flops if you aren’t careful. If a house requires extensive or complicated repairs, it could end up costing you more time and money than its worth and you may end up losing money on the flip.
While I can’t give you an exact answer for how often flips turn into flops, I do know that often it’s up to you whether or not your flip turns into a flop. Make sure you do your due diligence by getting a thorough inspection before you make an offer on a house, doing this one thing can certainly improve your chances of successfully flipping a house. In addition, I also encourage you to avoid any properties that may have the following problems.
PROPERTIES THAT ARE POTENTIAL FLOPS
A Property Damaged by Natural Disaster
If a house was previously damaged by fire or water, this is a huge warning sign that you might want to avoid purchasing this property. Fire and water damage, while they may not seem like anything major on the surface level, can cause deeper and more extensive damage to a home than meets the eye. Fire and water can often lead to expensive and time-consuming repairs. If a home had previous fire or water damage, then it may be best to just walk away from this house, no matter how good of a deal the property is.
A Property That is Too Large
Purchasing a large house isn’t a bad thing, unless you are a flipper. Buying the largest house in a neighborhood will only be costly and time consuming as you’ll need to do twice as much work and buy extra paint, flooring, fixtures, etc. Clearly not worth it if you are trying to make an income! Play it safe and stick with the smaller homes, as they are able to return a profit much faster than their larger counterparts.
A Property With Foundational Problems
No matter how beautiful a house is, a property with foundation problems is always going to be complicated and expensive to fix. Warning signs of a bad foundation include cracks, crumbling, water damage, soil shifting, sagging floors, or doors that won’t close. If a potential flip includes any of these problems, I would not even bother with it as it’s going to be more hassle than it’s worth.
A Property That is Too Unique
If you come across a domed, A-frame, or other unique home at a great price, it may be tempting to buy it. But I recommend avoiding these homes at all costs! Chances are, even if you spend the time and money fixing up the house and installing new appliances, no one will want to buy your flip. Unique, one-off homes may look fun, but most home buyers would rather stick with the tried and true traditional layout.
A Property in a Bad Location
Whether a potential flip is located on a busy road, is near run-down homes, or is in a high-crime area, you may want to avoid purchasing it as these are factors that can turn-off potential buyers. Even if you are able to buy the home for cheap due to its less than desirable location, you will have a hard time attracting potential buyers when you try to sell it.
House flipping can prove to be a lucrative business and a great source of income, but it does come with its risks if you aren’t careful. Follow these tips to avoid a bad deal, and you’ll be able to save yourself from spending precious time and money on a flop. You can also register for our Real Estate Elevated workshop to learn how you can avoid making mistakes that will cost you.
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