Lesson #1: Do not believe it when someone tells you that you can buy properties with no money and with bad credit. You can do it, but it’s not easy and you can quickly end up deeper in the hole than you were to begin with. It is definitely not a good idea and you’re setting yourself up for failure the majority of the time.
Lesson #2: Flipping houses is not a ticket to quick wealth. It requires lots of money, knowledge, patience, and a ton of hard work.
Lesson #3: There is a slew of competition and the pros already know what they are doing and how to do it. In order to make the large profits promised in those late night infomercials, you have to find the deals quickly and have the money to buy right then and there.
Lesson #4: No matter how much you think it’s going to cost you to repair the property, double that amount when you’re doing your calculations to see if you can make a decent profit on the property. Adding in a fudge factor will give you room for those unexpected surprises you will most definitely come across.
Lesson #5: The average Jane or Joe can not make a career out of flipping houses. You need at least a little business saavy, some good accounting skills, knowledge of the real estate lingo, a good banker, and industry contacts.
Lesson #6: There are a lot of reasons that can cause a renovation project to be delayed past your original target date, but the main reasons revolve around repairs. If you’re not doing the work yourself, you will more than likely have contractors who do not show up on time or do half the work and disappear.
Lesson #7: Unless you want to risk having a halfway completed repair job, do not pay a contractor the full price of any job until it’s complete.
Lesson #8: Making friends with the people who work at title companies can make your life much easier. These folks can control how quickly the sale of your property proceeds. If you want a speedy closing, be nice to them.
Lesson #9: When calculating your profit margin, don’t forget to add in the cost of utilities, property insurance, taxes, and mortgage payment in case you can’t sell the house before the first mortgage payment is due.
People can make money buying and selling real estate but it’s not as easy as it look on TV. It takes a lot of hard work, time, and skill. So if you want to give it a try go ahead, but don’t quit your day job just yet!
