Mistakes That Can Turn A Flip Into A Flop
Your goal may be to build wealth quickly by buying and selling properties. But the reality is that flipping properties is a tough business. Here are 10 mistakes that could turn a flip into a flop.
- Liar loans. “Lying on a mortgage application is a federal crime,” says Joseph Falk of the National Association of Mortgage Brokers. “It includes bank fraud, wire fraud and mail fraud and potentially a host of state offenses. This can result in jail time.”
- Overpaying. No matter how promising the property, the bottom line is trump.
- Lacking cash. Desperation makes investors do crazy things. When you act in haste, you’re more likely to make poor decisions.
- Quitting your day job. A steady source of cash staves off desperation.
- Hiring unlicensed contractors. Not only do they present an insurance risk, but worse yet, often they don’t get the job done.
- Buying sight unseen. You can bet it will be uglier than the seller said it was.
- Buying property far, far away. Even the tiniest repair can mushroom into a crisis.
- Buying too many properties too fast. Too much money, too little time.
- Underestimating remodeling costs. There’s no such thing as a cheap and easy fix.
- Having a poor exit strategy. Running out of cash and living on credit cards doesn’t work. (Source: USA Today, Noelle Knox )
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