Six Mistakes Beginning House Flippers Make

Mistake One: Impatience

Before you buy any piece of property, you should have a strong sense of what it will ultimately sell for. Don’t get impatient when looking for a property. Shop around, shop hard, and never buy a house just because you're tired of looking. Getting lazy could cost you dearly.

Mistake Two: Lack of Knowledge

Know your target area, your local economy, and everything else about the area you're concentrating on. There are ways to make money in any type of real estate market, but only if you know what type of market your area is experiencing at any given time. If you want to make money as a real estate investor, there is no substitute for an intimate knowledge of your target area.

Mistake Three: Emotional Buying

Don't allow yourself to fall in love with an investment property. That's one of the surest ways to make mistakes in judgment that can severely impact your bottom line. Don't let your visions of what a home could be drive you overboard on fix-up expenses. Always remember that you're in the business to make a profit.

Mistake Four: Failure to Negotiate Effectively

Remember, there's lots of money to be made in real estate, but that doesn't mean taking unfair advantage of people. Every seller is a human being, and sellers are often in a severe amount of stress, so you'll have a higher success ratio if you show genuine concern and compassion for the seller's situation when negotiating to buy a home. Focus on solving the seller's problems, and you'll close many more deals.

Mistake Five: Underestimating costs

There are costs involved in every real estate transaction, and you'll need to estimate them as closely as possible BEFORE you begin negotiating a price with a seller. Know your loan fees, your closing costs, and have a good handle Talk to loan officers, real estate agents, escrow people, and contractors so you'll have a good handle on how much money it will take to fix a home before you sit down with a seller to make your offer. Failure to do that can cost you dearly.

Mistake Six: Taking too Long to Flip a Property

Shop for your fix-up materials long before the transaction has closed. That doesn't mean you have to buy them, which could be a problem if the house doesn't close for some reason, but it does mean you should know what the home needs, where you'll get it, its availability, and most importantly, what it will cost. Once the home has closed, you'll be ready to move quickly to get the work done and to get the house back on the market to flip it as fast as possible so you can move on to the next home.

There is lots of money to be made in real estate investing, IF you avoid making mistakes. Your number one defense against making mistakes is arming yourself with as much knowledge and experience as possible.

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