There is no question that you can make significant amounts of money buying, repairing, and reselling homes. However, it takes knowledge, time, and careful planning to get the most profits in a minimum amount of time, and if you make a mistake along the way, it can seriously affect your bottom line.
1. Buy in bulk
The first step to avoiding costly mistakes is arming yourself with as much knowledge of your target area as possible. You need to know the final sale price of a property BEFORE you even think about bidding. Think of yourself as a retailer, buying as close to wholesale as possible and then retailing once the job is complete.
2. Estimate accurately
Whether you do the repair work yourself or you hire it, in addition to knowing how much the home will eventually sell, you will need to have a clear idea of how much repair a home will require and how much those repairs will cost. This can be a big mistake if you don’t calculate repair costs as accurately as possible. Of course, you will find surprises along the way, but if you have added a certain percentage of “fudge factor” in your estimate, those surprises should not be enough to wipe out your profit at the time of sale.
3. Advance plan
Once you start to seriously consider buying a home, another big mistake is failing to get your contractors lining up to get in quickly and do the work that will be necessary for the resale. Beginning investors often wait until closing to start lining up their contractors, only to find that they are already booked on other jobs and won’t be able to make it to your project for weeks or months. As soon as your sale transaction has entered escrow, call the phone and begin mobilizing your home renovation team. That way, you’re ready to go to work as soon as the sale closes, putting more money in your pocket through faster resale.
4. Compare prices
Another common mistake that can hurt your balance sheet is not buying a lot of supplies. You may have to hire contractors to get the job done, but that doesn’t necessarily mean that those contractors will go for the best buys on things like paint, appliances, fixtures, carpets, and all the other materials and supplies that will be needed to update and repair one. home for resale. You can save hundreds or even thousands of dollars by purchasing materials rather than simply purchasing them or having your contractors purchase them.
5. Examine the work
Finally, another common mistake, especially if contractors do the work, is simply letting a project continue without constantly monitoring its progress. That means giving up your weekend plans for a time to work on the property or to monitor how your contractors are doing.
Remember, buying, repairing, and reselling homes is a business and requires as much business sense and attention to detail as any other business venture. Avoiding common mistakes like the ones we’ve mentioned can add thousands of dollars to each property’s results.
