Flipping estate property can be a lucrative means of leveraging your income to generate massive wealth. But before you get too excited about seeing the ‘sold’ sign out on your lawn, there are a few mistakes that many novice flippers make. From miscalculating required repairs to overspending on the home – all of these and more can lead to a frustrating time for flippers.
Take a look at these three mistakes property flippers make in Oklahoma City’s real estate market and try to avoid them.
Overspending on the Home
To maximize your returns on the flip, you have to buy the property at a bargain. One tried and tested strategy is to use the 70% rule formula, which says that you should buy a property at 70% of the projected After Repair Value (which is the value for the property after it has been improved and renovated).
This rule provides you with enough wiggle room to complete any repairs and still turn a profit –and it’s absolutely important to stick to it, especially when you’re just starting out.
Pro tip: If you can’t settle for a price below the 70% mark, it’s time to look elsewhere.
Not Account for Repairs
Evaluating your repairs is important if you want to make a profit.
Make sure to bring your contractor with you to the property and have them give you an estimate about any repair costs that may be needed. Try to shop around for other contractors to see if you’re getting the right estimates.
Not Knowing About the Local Market
It is important to understand the local market before flipping a property. You have to step into your buyers’ shoes, and analyze what they’re looking for and any hot trends to look for. It helps to work with an experienced real estate agent to help you make a more informed investment.
Wrapping Up
Like most things in life, you probably won’t get flipping right on your first attempt. So it’s okay if your first project doesn’t go as planned. Learn from your past mistakes and be smart about what you buy and how much you spend the next time around.
If you’re interested in flipping homes for buyers in local communities in Oklahoma City, simply click here to learn more about your options.