The Top 5 Mistakes That First Time Rehabbers Make

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How To Flip Houses & Make Money In Real Estate – Without Prior Real Estate Experience

There are many factors that go into a successful rehab, but there are basic mistakes we see new rehabbers make time and time again. Keep on reading for our five tips that will help to start your house flipping career on the right foot.

1. Not understanding rehab cost

– As someone just getting started in real estate investing, it’s critical to educate yourself on the hard and soft cost of rehabbing a property. Good education on the solid cost of items to rehab a property is critical to the success of truly determining if a deal is a winner or not.

Each potential rehab deal needs to be analyzed correctly based on rehab cost to successfully confirm it will be a profitable deal when it’s sold. The best way to learn how to do this (without losing a ton of money trying to do it yourself) is enrolling in a real estate investing course or a house-flipping coaching program.

2. Lacking a solid rehab team

– Every successful rehabber has a solid team of general contractors, plumbers, electricians and other professionals who are needed to flip houses. A bad rehab team is one that doesn’t understand the importance of deadlines, lack’s education on working with a rehab client and can’t manage a rehab effectively; this can have a negative effect on the rehab in general. It’s also important to utilize professional vendors who are licensed and have the proper insurance to protect you from potential violations and on the job insurance challenges.

3. Lacking Backup Vendors and Contractors

– Not having back up vendors or contractors is a very bad habit for first time investors. Good contractors/vendors are always busy with other clients because they are good, so it’s important to have back up in case they are too busy to help you with your rehab project.

4. Failing to Pull Permits

– Some rehabbers fail to understand the importance of a permit during a rehab project. Permits are critical for Town/City sign off so the work is supervised and done legally. Failure to utilize permits will delay a project, cause fines by the Town/ City and cause issues with potential buyers and lenders during the resale process.

5. Chasing profits versus selling based on timeline

– Many first time investors focus on making the most profit on a project as opposed to selling faster and turning their money into their next project. It’s important to price a property a little below the actual value so it goes under contract quickly and that a solid buyer can be chosen to increase the chances of the deal closing in a timely manner.

How To Deal With Asbestos In Your Flips

Just the word “Asbestos” causes most people to cringe. Growing up, the word immediately made me think “lung cancer” just by association. Now that I’m a rehabber, the word immediately makes me think “time to spend money.”

Obviously asbestos needs to be disposed of safely, and this can cost you some money. But dealing with asbestos as a house-flipper means staying informed and understanding what you’re dealing with. Before getting started in real estate investing or house-flipping, asbestos is an important topic to stay informed on.

To help with this, I’ve put together some basic information about asbestos to add to your list of quick house flipping tips:

Asbestos is a natural mineral that does not easily decompose. It was typically used in homes built between the 1930s and 1970s (the U.S. government banned it for use in homes during the late 70s, so if the property you’re buying was built in the 1980s or later, the chances of it containing any asbestos are slim).

The most common uses of asbestos during that 40-year span included:
Roofing and siding shingles
Textured paint
Patching compounds used on wall and ceiling joints
Artificial ashes and embers used in gas-fired fireplaces
Walls and floors around wood-burning stoves
Vinyl floor tiles and the backing on vinyl sheet flooring
Hot water pipe and steam pipe covering

So, if you find a property that you have purchased for Rehab and it is built during those above stated years, it is up to you as the home owner/flipper to ensure that you do your due diligence.

What would I do? Well, first assess the property and develop a rough idea of your scope of work. Once that is done, if there is any area of the house where there may be asbestos you should have a “survey.” This survey needs to be done by a licensed contractor to evaluate any/and all parts of the house. A survey consists of testing any and all areas of the house taking samples of the areas where asbestos was commonly used. These samples are then sent out to an Independent testing company. (FYI- This survey needs to be completed before you do any type of demo of the house.)

If any areas of the house come back positive, then proper disposal/removal will need to take place and you’ll have to hire a Licensed Asbestos Contractor to abate the infected area in conjunction with the Commonwealth Massachusetts Regulations or CMR’s regarding of handling of asbestos materials. If you are flipping in other states, please refer to your local state regulations.

Here is a link to the specific CMR (310 CMR 7.15):

This is just a broad overview of dealing with asbestos while flipping. Please, use the CMR’s as your guide, and definitely err on the side of caution when dealing with asbestos. It can be an extremely costly mistake if you choose to ignore any contamination during your flips. Best of luck!!

Interested in being coached by one of the most successful Real Estate Redevelopment companies in the country?

Check out our totally online coaching program designed to teach you everything you need to know about flipping houses, from sourcing deals, getting financing, managing contractors, all the way to closing with buyers and much more!

Picking the Design of a House For Market

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When getting started in real estate investing or house flipping, a lot of people don’t consider how important the design aspect is. However when you’re house flipping there are a multitude of variables to take into account: price of purchase, rehab amount, permitting, contractors …yada-yada-yada.

One component that often gets overlooked is the design. Many rehabs get a bad name because they go with the thought that the bones of the buildings and the legal aspects are most important. While those are certainly important don’t overlook the design and finishes of your property. Your goal is to sell the rehab when you are finished first and foremost.

If you take care of every other item in the process of the rehab and design a “cheesy” and underwhelming product then you are doing yourself a huge disservice. Buyers want to be wow’ed! You can’t do that with cheap vinyl floors and formica counters generally (this certainly depends on the rehab and can vary based on the market). You need to look at a few different areas where you can provide that wow factor for a little extra money. photo (15) You want a buyer, and hopefully competing buyers, to do this you must provide them with finishes that impress them and show them that you aren’t skimping on the finishes. Keep in mind that buyers are coming into these homes and usually have buyers agents. These buyers agents generally do their homework. If they are worth there salt then they likely have reviewed the property and have seen that it has only been owned for a very short period of time. Once they see that it was owned for say 6 months they typically know it’s a “flip”, which by all accounts doesn’t have the best connotation. Therefore make sure you provide the product that gets them to look past that fact and provides confidence in a potential purchase.

With that being said be sure to look at the following items when conducting your house flipping.

1. Flow and Layout:

Many houses that are purchased, especially in the northeast, are extremely old and the layout is designed from old heating processes before all of the systems we have today. Likely many of these homes were heated via wood stove back in the day and the home is very compartmentalized based on the systems from the days of horse and buggy.photo7 These sectioned off rooms aren’t typically looked at in the best light. People want open spaces nowadays. This can be accomplished a number of ways and some cost more than others. You can move bathrooms, kitchens, walls, etc., but that can get very costly. Be sure to consult your builder/contractor and make sure the wall you want to take down won’t require major reconstruction. They will be happy to do it regardless, but if you have to move a ton of plumbing and electrical and also place a weight bearing beam the prices can add up pretty quickly. Be sure to work with your trusted contractor to assist you in this evaluation before you get too far ahead of yourself.

2. Colors: Go neutral.

You can provide a great looking finished home with some very standard tans and grays. You really don’t need more than 2 tones for most homes and often can get away with one.

3. Materials:

Be sure to pick lighting and plumbing fixtures that don’t turn buyers off. If you skimp too much here your are doing yourself a huge disservice. A few extra hundred dollars will allow you to purchase items which wow that buyer and provide them that comfort level that you are into providing quality. Also keep in mind that everyone has an expertise. You may not have a eye for finishes. Not everyone does. A major key to this business is knowing what you aren’t good at and finding people who are to fill in those skills. Maybe your mother, brother or daughter is the prime candidate. Generally they love to provide input and help. Send them to Home Depot, Lowe’s or another location that is economical in your area for materials and have them provide some ideas and pick out some options.

4. Spend your Money Where it Matters Most:

Kitchens and bathrooms are huge area to focus on. These rooms sell the house more often than not. Families spend more time in their kitchen than most other spots in the house. Focus on crisp finishes which make the space fit the home and also provide space for hose modern amenities. Granite is huge! You can get a quality granite counter in a kitchen and it is often the fist thing that comforts a buyer when they come in. We put granite in every house and it’s never ceases to be a bonus when buyers come through. “Granite, wow!!! I love it” is often what you hear. Bathrooms are also important Make them as clean as humanly possibly. You don’t wan’t drab older parts left in a bathroom, IF the same feels “used” you’re gonna lose buyers. This is a very private space and people want to feel like it’s new so treat your house flipping efforts as such.

All in all there are a multitude of things to take into account when house flipping. Be sure to not cut yourself off at the knees when you get to design and finishes. A little extra time and thought and you will be able to provide that finished home that buyers will be fighting for!

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