Investment Strategies: Sidney Torres and 5 Pitfalls You Must Avoid When Flipping Houses

Investment Strategies: Sidney Torres and 5 Pitfalls You Must Avoid When Flipping Houses

Sure, it’s a seller’s market these days. With more buyers than the actual number of listed properties for sale, you’re bound to be ecstatic to dive in and earn tons of dollars. Add to the mix that the inventory shortage is nationwide, offers are most likely to rise in value as more and more buyers want more of the same. Making a killing at this point in time could be on top of your head.

Then, there’s all that stuff on TV. You see a decadent home transform right before your eye in a 30-minute show. Of course, the actual flipping takes longer than that. Put in super-adorable TV hosts and it would seem the process is seamless. What you don’t actually know is bound to make your jaw drop.

What many TV house-flipping shows don’t reveal is that there are actually dozens of workers making the flip happen. These ghost crews are responsible for making the job a walk in the park. Plus, you don’t actually see actual mistakes done when factoring in the improvements. In short, as sad as it may sound, it’s all a show. Classic example: HGTV House Flipping.

Before you sink your head in desperation, know there’s actually money in house flipping. You just have to do it right. CNBC rsquo;s Sidney Torres is a brilliant example.

And to succeed, you need to do your homework. Steer clear of stupid mistakes people make when flipping houses. Here are five.

Pitfall #1: Not Enough Money

Think of a property to flip as an uncut gem. The beauty is there. You just need to let it shine. And all that needs cash.

What many first-time flippers tend to forget is buying the house is just the first half of your financial obligation. Making it shine is the other half. Not factoring ample dollars to that end means you’ll fall short of your goal to sell it.

You can connect with lenders or mortgage companies to help you manage the acquisition cost. A good one can show you a wide option of terms and packages to fit your current financial situation. Without a doubt, finding a reliable one that offers low-interest rates is a must for many investors, sans tons of cold cash.

But don’t forget renovation costs. To profit, your sale price must surpass all the costs accrued added together: acquisition costs, renovation costs, and costs when you’re holding the property.

You must be able to do the math before you ever decide to snap up a property. Things can easily add up: $20,000 for the kitchen, $10,00 for the bathroom, and so on and so forth. Add the taxes (e.g., capital gains tax) and the number you see on the listing is not the only weight to carry on your shoulder.

Pitfall #2: Not Enough Time

Simply put, if you want a fast one, flipping houses is not for you. Right off the bat, flipping houses takes time, especially true if you plan to DIY the work needed. But even if you hire experts, the process will still considerable time.

For one, finding the right property to buy takes time. Then, once you have the keys to the house, you’ll need to invest time to keep it in good order. If you’re working full-time, that may mean putting evenings and weekends on the property. Even with experts in, you’ll have to supervise to keep things on schedule and spot on.

Then once the property is in tiptop shape, you’ll have to schedule inspections to ensure it measures up to needed building codes. If it’s subpar, you’ll have to go back to the drawing board to fix it all up.

Then, there’s the selling process. A good agent should be able to help you. But that would mean giving away commissions.

Pitfall #3: Not Enough Skills

If you really want to make a huge profit in flipping, then flipping it yourself is key. Sidney Torres, a successful house-flipper host on CNBC did DIY his first flip.

Small wonder professional builders along with skilled craftsmen are ideal candidates to earn tons of dollars when flipping houses. They can save a lot. It’s called sweat equity. If you have to hire a hand to hang a portrait on a wall, flipping may not be for you.

Pitfall #4: Not Enough Knowledge

Far too often, choosing which house to flip is the biggest roadblock for any would-be investor. And that means having the investor savvy to get the right property started.

Secondly, you’ll need to be able to discern which houses are top candidates for house flipping. Know not all houses priced less are worth the attention.

Pitfall #5: Not Enough Patience

In investment, only fools rush in. If you’re going to snap up the first house offered to you, you might be throwing dollars needlessly. The same goes for hiring professionals. You need to vet experts to work with you.

Flipping houses has a lot of hidden costs. If your way to getting it done is to hire a pro each turn, you’ll end up adding costs. Keeping costs down is key to flipping houses. Do that and you are closer to your first million more than you think.

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