Problem 4: Not planning for the unexpected
Problem 5: Under and over pricing
TOP 5 MOST COMMON FACTORS THAT DESTROY PROFIT ON A FLIP ANDREW CORDLE
• Have a system in place
• Effectively managing your time will help manage your budget
• Set clear expectations and stick to them
Problem 4: Not planning for the unexpected
I mentioned this point earlier, but it is so important it needed its own paragraph. No matter what your level of experience in the house flipping industry is, unexpected things to happen. Whether it is a problem that happens during construction or a problem that was just overlooked during analysis, not planning for the unknown could send you into a tailspin and potentially kill your profit on a flip.
This point also ties in with managing your time. Adding an extra week to your time frame allows you the flexibility to run into problems and still meet your deadline. If you want to profit on a flip, you need to expect the unexpected. Add an extra 10 % into your budget. Throw an extra week onto your estimated time for repairs.
Most importantly, act! Don’ t let an unexpected problem come between you and your goals. If a problem comes up, take a few minutes to think out your options and make a decision. The worst thing you can do is sit around and hold up all progress. Remember, unexpected things happen, don’ t let it get you down! If you have a system in place and you act, there is no problem you can’ t overcome.
• Allow an extra 10 % in your budget
• Add an extra week to your timeframe based on your repair schedule
• Act! Don’ t let unexpected problems hold up your progress
Problem 5: Under and over pricing
Your selling price is the biggest factor in what kind of profit on a flip you’ re going to make. If all of your repairs have gone according to plan then your ARV should be your end price. Underpricing your flip will probably get it sold fast, but you will be killing your own profit and killing property values in the neighborhood.
After investing time and money into a rehab, you may become very emotionally attached and feel that it deserves a higher price that your estimated ARV. This is another great way to kill your profit on a flip. Your flip will just sit on the market until you take a lower price on it.