5 Obstacles to Overcome When Flipping a Property
Flipping a property is a great way to expand your real estate portfolio. You know the idea of buying a home below market value, investing a few thousand dollars, and selling it for a profit sounds really good. Well, until something happens to derail your plans and increase your costs. However, flipping a property doesn’t have to be a huge situation of hard-knock life lessons. There are people who’s done the work, learned the lessons, and made the profits. We know those people, and now we want to share with you how to overcome a few obstacles you may encounter during the process of renovating a property for resell.
Obstacle 1: Inclement weather. Whether it snows 12 inches or it rains 12 inches, the weather can halt your production and leave you wondering what to do next. You’re still paying your crew, but they can’t actually work. Be sure to map out possible issues with the weather before you begin a project. If it’s raining can you have everyone work inside? Are there ways to logistically keep things on track?
Obstacle 2: Permits. You may find yourself waiting more than you’re working. Waiting for the city or county to issue permits for your site may prove frustrating. Be sure to know what permits you’ll need for the project and apply for those permits as early as possible. While you’re waiting for permits, also order materials. Hopefully, permits and materials will arrive at the same time and you can get started without a headache.
Obstacle 3: Money. Expenses will continue to find you during the process. Some of them will be expected and others will be a total surprise. Be sure to have your budget and contingency budget prepared for the costs. If you are receiving money from a funding source, be sure to know the details of those agreements. Keep your CPA on speed dial and know what you have to spend and what you don’t.
Obstacle 4: Stealing. You may walk up and notice that all of your lumber from the last drop off is missing. You’ll be livid. You’ll call your contractor and he or she will have no idea what happened. This is nature of what happens when a bad person sees a construction site. They are inclined to take things that do not belong to them. Be sure to have insurance for the site, keep all valuables out of sight, and visit the site often. The more people see you around, the less likely they will have time to “shop” from your property.
Obstacle 5: Vacancy. You’ve finished the project and now it’s time to sell it. However, the property isn’t selling as quick as you thought it would. You’re wondering where all the buyers are. Well, it’s hard to identify where the buyers are, but you can start seeking out buyers before the property is completed. If you have a database of clients looking to buy, share the property with them. If you have a social media following, let them know you have a great property you’d like to share with them (you don’t have to tell them you’re flipping it).
Things can and will occur. However, when you know what may be ahead of you, you can have a game plan. The primary concern here is knowing how to overcome the obstacles that will come your way. So, take a deep breath, find your flip, and don’t FLIP OUT!