In this episode, I'm uncovering the top 13 mistakes I see house flippers making, seasoned and newbies alike.
So many women I talk to who have this big dream of flipping houses for a living also have a lot of different fears around doing so. Most of those fears come from the "advice" or negative opinions they hear from people who aren't actually even out there flipping houses successfully.
Flipping houses can absolutely result in time freedom, energy freedom, financial security, and a life you love! It can also cause you to lose money, especially if you just decide to go all “willy nilly” and figure things out as you go.
You’ve got to have plans and processes in place in order to control the things you can actually control in a flip.
And if something out of the ordinary comes up, you better know who you’re going to for help before you actually need it.
My goal for a student's first flip is for her to do it in a way that makes her want to do another one, and another one, and so on. My goal for you would obviously be the same!
In other words, to do it in a way that:
By avoiding the mistakes I discuss in this episode, I wholeheartedly believe that you will check off all of those items.
Be smart. Make good choices. And don’t listen to people’s opinions unless they’re actually out there successfully flipping houses!
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Hey, you flipping ladies Debbie here and one of the biggest reasons why I hear from women that they haven't flipped their first house yet is that they are terrified of making a mistake, so don't worry. I've got you here I am laying out for you the top 13 house flipping mistakes that I see people make and I tell you how to avoid them. Alright, stay tuned.Speaker 2:
You're listening to the flip houses like a girl podcast where we educate, empower, and celebrate everyday women who are facing their fears, juggling family and business, embracing their awesomeness and wholeheartedly chasing their dream of flipping houses. Each episode delivers honest to goodness tools, tips and strategies you can implement today to get closer to your first or next successful house flip. Here's your spiky hair to breakfast, Taco loving host house flipping coach, Debbie DeBerry.Speaker 1:
Hey, what's up you guys? I hope that whatever you're up to today, it's putting a big smile on your face. Alright, let's jump right in. In this episode, I'm tackling the top 13 house flipping mistakes that I see people make and I am not just talking about newbies here. I have seen some seasoned investors make some of these mistakes. Now we all know that flipping houses really can lead to time freedom and energy freedom and financial security and you could leave a legacy, all of these really awesome things, but it can also cause you to lose money. One way to make sure of that is if you decide to just go all willy nilly and like figure it out as you go. No, you've got to have a smart plan and processes in place in order to control the themes that you can actually control in a flip. But when something out of the ordinary does come up on your project, you better know who you're going to go to for help, but you better know that before you actually need the help because if you get stuck in a situation where you're trying to make a quick decision and figure out how to solve a problem, because time is money and every single day that you're holding onto this project, it's costing you money. You better not waste time trying to scramble and find somebody to get help from. Know who you're going to go to ahead of time. Get a coach, get a mentor, find somebody you resonate with that you can go to for help. So my goal for your first flip is to do it in a way that makes sense to you and it makes you want to do another one and another one, and so on. For you to do it in a way that minimizes your risks, maximizes your profits, doesn't add unnecessary stress to your life, and feeds your passion for houses and creating beautiful spaces. And on top of all of that actually brings you a ton of joy. That's not asking too much, I don't think. By avoiding the following mistakes, I wholeheartedly believe that you will check off all of those items above. Alright. Be Smart. Make good choices, and don't listen to people's opinions unless they're actually out there successfully flipping houses. Okay, so the first seven mistakes I'm going to cover are around buying. Okay? So when buying, avoid these seven mistakes. The first one is ignoring the nuances of the neighborhood. And if I had a dollar for every time someone has asked me for my opinion as to why their flip isn't selling for the price they're asking, I'd have a really nice stash of dollars, Let's say for example, you've got two houses. Both of them are three bedroom, two bathroom, two car garage, single story and around 1500 square feet. Okay. You cannot assume that they will sell for the same price just because they are in the same neighborhood. It just doesn't work that way because what you aren't taking into consideration is that one of those properties is on a double yellow line street right next to a daycare. The other property is in a quiet culdesac. Now which of those houses will sell for more? Exactly. You've got to use your smarts. You cannot invest with just surface level information. Nine Times out of 10 that's exactly why the person who has called me for my opinion has a house that's sitting on the market. They'll eventually have to drop the price or hold it as a rental until the value catches up to it, and when they do drop the price, it's going to be by a significant amount. So, know the nuances of the neighborhood. Number two, not using the sniff test. Alright, so what the heck does that even mean, Debbie? So the sniff test is actually one of the steps my students learn and the point of it is to avoid making bad purchasing decisions. When you go look at a potential flip, you cannot look at it in a vacuum. Meaning you've got to look at everything going on all around the property and on the way to the property. For example, do the neighbors have cars parked in the yard? Does their house have a ton of deferred maintenance? Are the streets immediately leading up to that property well maintained ? Is there a ton of highway noise? Is there a fire or police station nearby? Does the street have double yellow lines, which indicates it's a busy street or does the street act as a cut through that.:
tons of cars use each day. All of these things are so important. You know why? Because these are the very things that when you go to sell this property, your potential buyers are going to be assessing. They're going to be looking at the neighbors, they're going to be looking at the streets leading up to the property. They're going to be listening. Is there a ton of noise coming from somewhere? The secret to flipping houses successfully is plain and simple. Give buyers what they want, exactly where they want it. So if the house does not pass the sniff test, it will not be what buyers want. Mistake number three, when buying a property is not buying title insurance. This is such a bad, bad, terrible idea. It usually costs me around 1800 bucks and here's the thing, it saved me $65,000 on a property where the title company made a massive mistake.Speaker 1:
It was a total flute that it even happened and it's too long of a story to go into for this episode. I'll definitely tackle it on another day. But just know that you are taking a super, super big gamble and it's not a smart one if you choose to forgo the title insurance. So make good choices and by the insurance. Okay, mistake number four. When buying property, trusting your untrained eye instead of calling a professional. So for your first flip and likely your first few flips, do not purchase a property that you have not walked through with either a contractor or a house inspector. Unless you're trained in construction or real estate and you know how to look at the electrical box and electrical wiring in the HVAC system, in the plumbing, in the roof, and, and, and just be smart and have trained professionals. Look at the property to give you a realistic rehab estimate in time. And with a ton of practice, you're going to be able to look at all the right things yourself and calculate your own repair estimate. Until then, be smart. Avoid really big, expensive mistakes and bring the professionals. Okay. Mistake number five, shortchanging the rehab estimate. Again, until you're trained at this, you need to walk the property with a contractor so that you can get an accurate estimate. When determining the rehab estimate, you simultaneously need to be looking at the comparable properties that have sold because those sold comps will dictate the level of finish out required to hit that target sales price. Most common mistake number six is using pie in the sky ARVs. Some of you might be thinking, what the heck is an ARV? Alright, so ARV is the after repair value, meaning what the property will be worth once it's all fixed up and ready to sell. Now there's several factors to consider when you're coming up with the ARV. The first thing is the level of rehab that's needed to achieve that target ARV. This is again based on the comps. Another thing is you've got to be sure you're comparing apples to apples when looking at those comps, you want the same property criteria, the same schools and whatever else is important for your neighborhood, and that's where number three comes in, which we've talked about before. Understanding the nuances of the neighborhood. You've got to know what's important, what is important to look at in that specific neighborhood. And then compare apples to apples. Now it's always best to be conservative, but not so much so that you never actually pull the trigger on a property because you're being overly analytical and you're just being too cautious. You want to know a clue that you're being way too conservative. If you're turning down every single potential deal that comes your way, but then you watch someone else flip it for a profit, there's your clue. Okay? Mistake number seven is not checking the permit history on a property. So I don't know if you know this, but when you purchase a house, you're also purchasing it's permit history. Meaning if at any time there was a permit pulled on that property and that permit wasn't properly closed out, you may be responsible for doing so. And I learned this one the hard way in 2011 and I wasn't even a rookie then. Look , nobody told me to watch out for this. And that's why I'm telling you, a lot of people don't even know to look at permit history. Seasoned flippers aren't looking at permit history, but you get to learn from my countless lessons, right? Okay, so really check the permit history. So go to your city permitting office and pull the permit history. Hopefully you can do it online if it is not available for you to do it online, go to the office. Do not skip this. Why? Because having to pull closed permits, you're having to reopen them and then having to get everything in such a way so that you can actually pass that inspection and close out the permit means you're spending more money and you're spending more time. Every single day that you add onto the project is another day that you're spending however much money you're spending a couple hundred bucks to carry the project. It just depends on your numbers. Okay, so check the permit history. Alright, these next three mistakes are around renovating. Alright? Mistake number eight is cutting the wrong corners. When it comes to saving money on a flip. There are plenty of ways to do so without looking cheap. For instance, I'm a huge fan of price shopping materials online, like it's kind of Nerdy, but I have this whole spreadsheet of various materials that I tend to use, including their SKU numbers. I know that's so gross, Debbie. So I research materials and I have several sites that I love to shop from and I also find new ones. I'm going to find the best price I can . I promise you that. Choosing the wrong rooms to skimp on the budget is another way that you can cut corners the wrong way. Always make sure the kitchen bathrooms in the master are your top priorities. And in that order, those are called the big three. Let's say the roof is functioning perfectly, but it looks a little worn in places and you decide, Eh, you know what? I'm going to replace it - even though you hadn't budgeted for it. By spending that money there, you have to reduce it elsewhere. And if that causes you to skimp on one of the big three, I promise you you're going to face some problems when it comes to resale, so just don't cut the wrong corners. Alright, mistake number nine is ignoring the details on the finish out. Oh Man. You know what? One of my big pet peeves is people who aren't mindful enough to pay attention to the details. The little things that some of you think might not matter, I can promise you they make a huge impact on prospective buyers. One of these is not carrying the shower or the tub surround tile all the way to the ceiling. It's like an extra 50 bucks and it makes it look a hundred times better and more high end than people who are just ending the tile at one to two feet below the ceiling, it looks so dated. That way y'all spend the extra money and be mindful, carry the tile all the way to the ceiling. I promise you the buyers will be happy. Alright, so since we're already in there, let's do another bathroom detail. You shouldn't miss if you're renovating a house. That's pre like 1990 ish. Please have your plumber raise the shower heads to the appropriate height. Again, it just makes the shower look more high end versus someone having to hunch over to fit under the shower head. That's super short. My final example is not caulking the baseboards, just caulk the baseboards. I promise you it will look unfinished. Otherwise, these are just three examples of the many ways to make the details work in your favor and I guarantee you that buyers are looking at these things and I know that because my houses sell faster and for more money than the people's houses who don't pay attention to the details. Okay. Moving on to mistake number 10 using quote unquote fuzzy math to account for unplanned expenses. Something I hear even seasoned flippers say, and perhaps they haven't been caught on this yet, but they will, is it's okay if you blow your Rehab Budget because you know what? You can just raise the sales price to make up for it. Oh Gosh. It is absolutely not true. Does not even come close to working like that. Even if the changes you decided to make that weren't accounted for in the original budget are really wonderful, the ARV doesn't change based on this. The ARV is the same regardless of whether you do this unexpected repair or not, it's the same one you came to when you purchased the property a couple months ago. Please do not fall into this way of thinking. I see so many houses languish on the market for this very reason. I promise you that buyers do not care what sales price you need in order to break even or make a profit. They just don't care. The only thing that dictates your final sales price are the quality and level of your finish out in the recently sold comparable houses. That's it. That's all that plays into it. It's a really dangerous way of thinking that could lead to problems, so the point is, avoid doing any fuzzy math. Alright, the next two mistakes are around selling. Mistake number 11 is skimping on professional photography in order to save money. Now, all other things being equal, the way the house looks when someone first comes across it. In other words, the first impression, which usually happens online, determines whether or not they even go see your house. Another thing is you don't want to ignore the landscaping and this doesn't mean that you should go all out. Don't do that because you won't get that money back. Plus when you drive by a few months later, it may just be all dead and that doesn't feel good. Again, I speak from experience while we're on the topic of landscaping, please be sure that you keep that yard mowed and watered while the house is on the market. I see it all the time where people just let the yard just grow and grow and grow and they don't maintain it. Don't do that. Don't let the house sit on the market with an unmold yard. I promise you that a nice yard will help the curb appeal tremendously and it really is all about that first impression. Now I understand. I don't want to hire a professional photographer. I can do it myself. My iPhone takes awesome pictures. I hear you, and also ... hire a professional photographer. I'm serious. I quickly learned that I'd rather pay my professional photographer $125 for 40 beautiful images and a virtual tour I can use then lose thousands of dollars on bet burst impression, so hire a professional photographer. Don't skimp. Alright, mistake number 12 and it's the second mistake that people make around selling. Number 12 is not staging the property in order to, again, save money. Remember earlier I said that buyers notice the details? Well, don't stage your flip and you'll see what I mean. Actually, don't do that. That's a terrible idea. Stage or flip. Here's why people buy homes, not houses. Empty Properties don't feel like homes. Secondly, our eyes need something to latch onto. If there isn't furniture to entertain our eyes, we will scan all the details of a room and find everything you skimped on in your flip . Number three, people have trouble visualizing how they're supposed to fit their stuff into a space. I pay my stager around $2,500 per house and I am confident that I make at least 10 to $15,000 more on the sale because of his amazing talents. Look, if you've got the skills to do this yourself, then go for it. But don't skimp and just throw up some cheesy accessories. It doesn't work like that. You need to really burnish the spaces. Okay, so here we are, the final mistake number 13 and this is just a general mistake. Number 13 is not acknowledging you don't know what you don't know. There is so much to know about flipping houses and the cool thing is each project brings its own lessons. Some people don't think that's cool, but I definitely do. It's one of my favorite things about flipping houses. You know, it's like a new puzzle each time. So it is rare for a project to go exactly as planned. And that's the fun part for me, figuring out the best solutions to issues or problems. It's so much fun. Anyway, when I first started flipping, I eventually joined a mentoring program because I admitted to myself after five years of stubbornly trying to figure it out on my own. And by the way, a hundreds of thousands of dollars of profit that I missed out on in those five years. That was silly. But that was all because I had to figure it out on my own. Anyway, I finally joined a mentoring program. I needed a proven process to follow. I finally admitted it to myself and I needed someone to turn to when problems arose that I didn't know how to handle. There will always be something new to learn and a new problem to solve. So one of your first steps before you even get into your first flip house is to find an expert you resonate with so that you can actually start this business in a way that will bring you so much joy. It will shortcut your path. It will lay out basically a step by step plan for you to follow so you don't have to figure it out on your own and you know who to go to when things come up because they will look, flipping houses will bring you all of the amazing things that you've heard. It will bring you all the freedom you want and the financial security and you get to leave a legacy, right? That's what we want to do. We want to make things better for our kids. I mean, that's what this is all about anyway. Right? Alright, you guys. Those are the top 13 biggest mistakes that I see flippers make. Now, I've also got a Handy Dandy downloadable and printable pdf about this very episode, so be sure you check the show notes for a link to that pdf. Print them out, tattoo them to your forehead. Do what you've got to do. Just don't make these mistakes and make smart choices out there, y'all. Okay? If you would, do me a huge favor. If you got any value whatsoever out of this episode, I'm pretty sure if you listened you did, would you do me a huge favor and wherever you listen to podcasts, would you leave a review for this show and also subscribe so you don't miss any of the weekly or bonus episodes? Because here's the thing, if I can reach just one more person like you and instill in her the belief that yes, she absolutely can have the life of her dreams . That's my ultimate goal here in the wise words of my mom. You go, girl. Alright, I'll see you on the next episode. Make it a great day.