Flipping a house for the first time is exciting! Your head is spinning with different ideas to improve the property you purchased, and of course the possibility of big profits.
However, if you are not prepared, you can fall into the trap of making one or more of these 5 common but dangerous mistakes:
1. Buying the Wrong House. If you don't buy at the right price, your flip is doomed from the start.
2. Underestimating Repair Costs. If you do not really know what your rehab costs are going to be, you are rolling the dice with regards to whether or not you will turn a profit.
3. Becoming Emotionally Attached to Property. Even though this seems like common sense, I see this happen almost every day: someone becomes emotionally attached to a house, ignores the numbers, and ends up losing his shirt.
4. Not Leaving a Cushion. If you want to make 30k on a flip, then you need to buy a house that you can make 40k on. This leaves you a cushion of 10k in case any unforeseen expenses come up.
5. Lack of Skills or Knowledge. This is probably the #1 beginner mistake I see. Only a fool attempts to flip a house without the guidance of someone who has done it before.
I was fortunate enough to have a couple mentors to show me the ropes.
If you know someone who has successfully flipped houses and is willing to mentor you, please use them. Offer them a percentage of the profits. It will be more than worth it.
