Do you have the stomach to flip houses?

I am very often contacted by first time house flippers, and my first question is always: do you think you have the stomach for it?

Indeed, house flipping is not like the reality TV show describes it. You need to be ready to face a lot of competition, there are a lot of buyers in Houston which is still considered a good market to invest in single family despite the drop in oil prices.

Here are the common pitfalls made by new flippers:

1) Buy too high based on too optimist sales projections

2) Do a remodel which is too basic, the property does not really stand up and therefore does not deserve the premium expected by the investor

3) Choose the wrong contractor or fail to supervise him.

There is a wide variety of contractors out there, from the worst to the best, a good contractor is the key to your success as he will save you time and give you good ideas.

4) Underestimating the cost of financing.

If you are using hard money lending, the cost can quickly escalate if your property is not sold on the market within the timeframe you wished for. In a competitive market like today, cash is king as there is not much space for the hard money fees in your profit margin.

5) Not hiring a good Realtor to sell the house once ready

When you do a flip, your house needs to stand out. A good realtor will market well your property and make the sale process more professional, justifying a higher price.