house flipping mistakes that ruin profits

15 House Flipping Mistakes to Avoid

House flipping can be a rewarding business venture if done correctly; however, this is not always the case. There is no “correct” method to flip a property, but numerous bad decisions need to be avoided in the early stages of development for a house flip to have a chance of working out successfully.

Any mistakes made when flipping houses can be costly!

Many new fix and flippers make the faults listed below because they are brand new to the industry. So, being aware of these pitfalls even before you start puts you in a better position for success as a flipper.

If you’re just getting started in real estate investing, this article outlines 15 house flipping mistakes to avoid. Read through to learn what not to do:


The budget must be in writing to see if you are on track or veering off course. It’s risky to either avoid creating a budget entirely or abandoning it halfway through the process.

Before you purchase a property, you should walk through it, inspecting the home very carefully, making a list of anything wrong that you see. Then get professionals to give bids for fixing these issues you discovered.

Create a renovation budget, breaking down each repair as a separate line item and sum them together to get your total estimated rehab cost.

Failing to make a renovation budget can cause you to go overboard spending more money on your flip than you have room to spend, and this can create a losing situation where you don’t profit on the flip.

Ensure to consult with a tax professional about the best ways to decrease taxes and save money during the rehabilitation process.


Failure occurs due to not knowing what steps to take next once the current milestone has been accomplished. The solution is to develop a precise strategy and document each phase and any obstacles and possible solutions.

Here’s a video on building your real estate business plan so you can have a process to follow.

You may be thinking of winging it for the first flip, pushing through the difficult periods, and taking things as they come.

Many first-time homebuyers discovered the hard way that this only results in higher costs and a longer time frame to finish the restoration when you don’t have a plan.

Part of your business plan should also include strategy for the resale. How will you market and sell the home so that it gets sold quickly, saving you costs like insurance and property taxes and utilities.


Collaboration is common among professionals as well. Despite the seasoned experience of even the best real estate agent, they may not have all the answers. Build your real estate investing team.

A company entity, contractors, lenders, and an agent on your team or another way to acquire correct sales data is necessary before you can begin to compete with other investors who have all of these items set up.

You should start by building relationships with family and friends and asking around to see if they know someone who is a real estate agent. Who do they know that are different contractors like plumbers, electricians, drywall professionals?

Additionally, you may discover some family members that can be counted on to contribute cash or subcontract the project on time.

After these individuals and their skills have been identified, it is necessary to network within the professional sector to recognize them and their capabilities.

Build your real estate investing team full of skilled, trustworthy individuals who will do quality work and make your house flipping operation run smooth.

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You have to consider how the neighborhood operates. What is nearby the location of the home you want to flip? What attractions  nearby in the surrounding area will help this home sell quicker to an end buyer?

How heavy is buyer demand in this neighborhood or this part of town?

There will always be factors that affect the sale price, regardless of how excellent your work is. Some house flippers tend to overlook important details, such as the new home’s location and how the environment compliments the house.

analyze the neighborhood when flipping houses


Budget far more time than you think you’ll need. For every additional minute you wait to flip your home, you are paying extra with your mortgage, interest, insurance, taxes, utilities and more.

As a general rule, renovations end up costing more than expected and take longer than expected. And once the property is listed for sale, set realistic expectations for how soon it will sell. Even in a hot market, getting a quick sale can be regarded as a bonus rather than part of the strategy.


A project’s success or failure hinges on the performance of the contractors. Personal recommendation is the best way to determine the contractors to use on the project.

If you cannot communicate with others who have worked with this contractor, they’re not the right person for you. Reduce the likelihood of falling into this trap by checking references through a competent and trustworthy source.

Make sure you get contracts signed, and don’t fall victim to paying anything up front. Don’t pay for work until it is completed and satisfactory.

Once a project is completed and inspected then you can agree on a payment timeline and method. If you’re going to work with a contractor, be sure they don’t ask for money upfront or a portion before beginning any work.


If a skilled professional is doing the work, they will take care of obtaining the necessary permits. Newcomers often attempt to skirt this part because of the expense, but doing so could cost you significantly.

In some municipalities, improper permits may result in delays to the house flip, added costs, fines, or even forcing a contract to undo all the work and time they’ve spent on an improvement to the property.


Focus on the most important things that need renovated first that have the most impact on the property’s value. This usually is the kitchen and bathroom of a single family home.

Kitchen renovations can raise the value of the home and help you sell your fix and flip property for more money. Things like updating appliances, new countertops, adding an island are all great examples of ways to boost a kitchen’s value.

The bathrooms, and specifically the master bathroom, should also take priority on a renovation checklist. Bathroom remodels can add value to a home’s eventual sale price.

Avoid making too many upgrades or spending lots of money on things that will have very little impact to the final sales price of the fix and flip.


flipping houses repair costs

To avoid incurring a loss, it’s smart to overestimate your expenses rather than underestimate them. This will help ensure that you will have a profit at the end of the transaction, and reduce the chances of the flip being a loss.

Have a home inspection done before purchasing your house flip. This will bring to light any issues with the property and give you a chance to get repair estimates ahead of time for these issues so you can have a more accurate renovation budget and know expected costs to cover the issues found from the home inspection.

Adjust the buffer. Regardless of how accurate you are at predicting flipping costs, there are possible future expenses that you could not have anticipated. Setting a buffer of ten to fifteen percent of your budget for unforeseen costs will help prevent you from being caught off guard.

Resource: Real Estate Investing School – How to Make $100,000 from Real Estate


Don’t base your decisions on emotions. When flipping houses, it is possible to become overexcited, to the point where your logical reasoning is overwhelmed by your emotional state.

You may find yourself rushing into a real estate deal due to your excitement that this is the house that’s going to make you money. However, take your time and due your research thoroughly. Make sure the house fits your exact criteria. Don’t just buy the deal out of emotion if there are red flags or if it’s lacking things from your ideal property criteria list.

Rushing into a real estate deal is a quick way to get in trouble financially.

It is vital to keep your feelings under check when making decisions. It is generally better to stick to one’s original strategy and if possible, have a second person with an outside perspective on flipping decisions to run your thoughts by.


Another house flipping mistake is not growing your skills over time. As someone who is going to renovate houses to make money for a living, you should pick up handyman skills along the way so you can start saving money by doing some of the work to these houses yourself!

Watch educational videos on YouTube to learn how to fix things yourself, especially easy items like changing out a toilet or painting walls.

You can learn new skills over time as you face different types of repairs during each house flip so don’t get overwhelmed trying to learn everything today. Take it as it comes.

Find a problem and go watch videos, read books, read blogs, until you’ve learned about how to fix the problem yourself. Call experts (contractors) and ask questions and get educated.


This is a no-brainer. Please don’t enter into any real estate transaction without proper documentation. Always get things in writing, whether it’s the purchase contract with a seller when buying, or a scope of work sheet that a contractor is going to do.

Having a formal document outlining the work to be performed by the contractor and the price will save you headaches as you review and inspect the contractors work upon completion to make sure they did exactly what was asked.

Having things in writing will prevent people from forgetting or lying or changing things down the road, which will also avoid potential arguments and disagreements.

Having it in writing also protects you legally if you need to show proof during a court hearing with a judge.


Be careful not to manipulate numbers when running an analysis on a potential fix and flip. It’s common to want the flip to work out and you change numbers to try to justify the deal as a good deal, when in reality we both know it’s not working out by the math so it’s probably not a deal to pursue.

Pick an accurate resale price by running market comps of other similar properties that sold recently and go with the middle or low end price of these home sales. Don’t over inflate the expected sale price assuming you’ll get a higher price than these other homes.

Always assume repairs will cost more, not less. Give appropriate estimates when coming up with a renovation budget. Don’t forget closing costs for buying and selling the property.


During the post-inspection, an impartial home inspector examines the repairs that have been made to the property and determines whether or not there are any problems. It is crucial to be prepared to discuss the results with the buyer if you are the seller of the property.

Expect a report to come back finding several items wrong with the property even though it was just recently renovated by you. Don’t be offended by the inspection report either! Instead use it as a way to further fix things or negotiate credits with the buyer.

15 – Not Learning From Past Mistakes

It’s okay to make mistakes. They are going to happen, especially in real estate investing. You may lose money but it will eventually come back as you grow and learn. As you get better at flipping houses you’ll make bigger profits and reduce mistakes made.

The key, however, is to learn from your mistakes and avoid making these same mistakes over and over again. Repeating mistakes more than once can be costly!

Overall, these are the important mistakes to avoid as a house flipper covered in today’s guide. Make sure to review this list and keep mental note so you improve your success as a fix and flipper.

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