While some shows may make real estate investing look like a breeze – in real life, investors know it’s never quite as easy as it appears on TV. In fact, flipping houses can quickly bring about more stress and turn into a headache if you’re not careful.
Here are some common mistakes all investors make, and tips on how Backflip can help you ensure your next flip doesn’t quickly turn into a flop:
Investing in a bad deal
It’s no secret that choosing the right deal is the most important decision an investor makes, and the more properties you invest in, the better you’ll become at identifying the good deals. I don’t know about you, but we don’t have that kind of time. Wouldn’t you rather make strong investing decisions right out the gate, every time?
Most would – but only Backflip members have the ability to know if they have a good deal on their hands in a matter of seconds. Whether you consider yourself a beginner, or an expert, having Backflip in your pocket is a competitive advantage that set you up for success the minute you created your account.
Overpaying for the property
Second only to investing in a bad deal is overpaying for a property. There is so much data and analysis that goes into deciding a property’s value, and trying to do it all manually opens yourself up to calculation errors. There’s no greater head-smack moment than paying a couple thousand dollars more than you needed to. That’s money that could’ve stayed in your pocket, after all.
Another benefit of having the Backflip app on your phone is the ability to quickly analyze a property and know what to offer in order to meet your revenue goals. You don’t need to sit in front of your computer for hours searching for and analyzing comps. You have the ARV, As-Is Value, high-quality comps and more anytime, anywhere. It doesn’t get easier than that!
Choosing the wrong partners
There are a lot of moments during the investing process that are out of your control, that’s why it’s important to choose partners who will do what’s best for your business. You need a team with a diverse set of skills, such as financial analysis, project management, marketing, and legal expertise – no one person can do it all.
When it comes to capital, a good partner will be able to provide access to financing that may not be available to individual investors. As a Backflip member, you not only have our team in your corner, but access to capital options that other real estate investors might not.
Once you submit an application for a property on the Backflip app, we’ll work with you to explore financing options that are best tailored to your investment strategy so you can mitigate risk and maximize returns.
Underestimating rehab costs
Now that you have an investment property with strong potential in your portfolio, it’s time to plan for the renovation. We’ve all seen those TV moments where the contractors come to the flipper and say something along the lines of, “we just discovered this problem, and it’s going to cost you an additional $10,000”. On a TV show, that kind of cost might not be that big of a deal. But for your everyday investor? That can be a make-or-break moment.
To help avoid this, be diligent about budgeting the amount you’ll need for home improvements. If you’re not sure what a repair would cost, you can talk to a professional contractor, or utilize your investor network. They likely have experience budgeting for whatever improvements you’re planning to make. Not only can they help give you an idea of cost, but they can also be a source for recommending great vendors to work with. Lastly, be sure to consider adding a little extra spend as a cushion, just in case you get any of those surprise expenses.
Not making strategic home improvements
Something that beginner investors rarely take into account is how to determine which improvements a home truly needs, and where to invest their renovation money. Rooms like the kitchen and bathroom are always safe bets, but how you go about fixing them can help you meet your bottom line.
For example, if cabinets seem a bit dated, but structurally strong, maybe they just need to be repainted instead of replaced. Need a new countertop? Look at cheaper options like quartz, which can give the same polished look as granite, but for a fraction of the price. Save time, energy, and money where you can, while making improvements that will make a big difference.
When you know what mistakes to avoid, you can make better decisions that will help you get the most profit out of each investment. Keep these 5 things in mind, and you’ll be even more savvy than those flippers you see on your TV!