Although property flipping sound easy – buy, renovate and resale, but there are some existing pitfalls that you might want to be aware of.
➊ Lack of Neighborhood Knowledge
Getting to know the level or living style of your neighborhood is very important before setting a budget on that property that you are planning to flip. In the planning of flip, ensure that the property is matches the reality of the neighborhood and people are able to buy the home that you are creating.
➋ Variable Market
The property market is not stable and is constantly changing. There are many things that are bound to interrupt your process on the investment that you are working towards. Natural disasters, crimes or any triggering change in the neighborhood will also have impact on the property prices nearby.
➌ Not Setting A Budget
If you buying a new development property, it means you buying straight from the developer. It is advisable to buy the property with fully-furnished, as the property is ready to rent once you completed the transaction. Therefore, you’re no need to setting a budget for remodeling or renovation. But it does not apply the same when you buy an older property and you might need to watch on your budget.
➍ Underestimating the costs
You will need to have a proper plan for value of supplies, tools, labor and equipment. Always enquire the quotation from multiple contractors and compare their prices. Do the research of each contractor company as detailed as possible to avoid to get cheated by dishonest contractors by quoting ridiculous amounts for any of the materials used or bad quality of work.
➎ Underestimating Your Own Limitations
Have achievable and sensible expectations before getting the property complete with the price. Keep in mind what are you able to contribute and what things you should have to get experts to handle.
➏ Buying Foreclosed/ Auction Property Will Take Time
Although buying foreclosed/ auction property is the way to save money on property purchase, but it does takes time. When you plan to buying a foreclosed or auction property, you are actually buying from the bank/ moneylender. Since it has involved the legal work, it will take up to around 6 months to get an official ownership of that property.
Finally, everything good things always come with bad side, nothing is perfect. Although property flipping is seem easier for first-time property investors, but it’s costly and risky that you may not aware yet until you learn the lesson. No matter what investment strategies that you choose, you must study it very well, know its risks and bad side, see whether you can bear it’s risks, then can only execute it. Best of luck on your property investment journey!
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