1. Paying too much for the house – When a lot of new investors (and even some experienced ones) look at a house with potential they worry about losing the opportunity and just pay market price for the property. The money is made in the BUY when flipping houses and you need to get the property for below market value – even if that is only a 15% discount based on as-as comparables.
2. Over renovating for the area – Just because you see granite counter tops and brand new kitchens going into houses on TV does not mean that is what makes sense for the area your project house resides in. The worst thing you can do is end up as the nicest house on a bad street! This will mean your house will appear far too expensive priced right for your profit margins and will sit on the market longer than necessary costing you money in holding costs or “burn rate”.
3. Paying retail for materials and labor – Please avoid paying 15% markup for materials by trades/sub trades, and any time you can avoid buying something at home depot/Rona – always do it! The markup on some of their products such as screws/fasteners can be as high as 1000%. Wholesale outlets are the way to go, you can set up cash accounts at any of these places with a company name/address giving you normally a 30% or more discount on their regular prices.
4. Not having a plan or having a plan and not sticking to it – Always have a well detailed scope of work, even if you are doing a lot of the work yourself (which I don’t recommend long term) you need to stay on track and on budget and deciding to make even small changes throughout the project can negatively affect your timeline/expenses very easily. When working with contractors this will greatly simplify the process and avoid disputes over the bill if everything is well documented
5. Doing it yourself when you shouldn’t – Unless you are a professional in a particular area it will always be more cost efficient and save you time to hire out the work you need done, after all the speed to getting the house back on the market is what really counts especially in a market like Calgary right now when prices are shifting quickly.
Respect the hustle,