Common House Flipping Mistakes to Avoid

Every experienced flipper has a story of a deal gone wrong. Learn from these common mistakes before they cost you thousands.

Mistake #1: Paying Too Much

The Problem: Emotional buying, fear of missing out, or sloppy analysis leads to overpaying.

The Fix: Stick to the 70% Rule religiously.

• Maximum Purchase = (ARV x 70%) - Rehab Costs
• No exceptions. Walk away from bad deals.

Mistake #2: Underestimating Rehab Costs

The Problem: You budget $30k and spend $50k. There goes your profit.

The Fix:

• Get multiple contractor bids before buying
• Add 20% contingency to every budget
• Assume the worst on old houses
• Never skip the inspection

Mistake #3: Overimproving

The Problem: You install $50k kitchen in a $400k neighborhood. Buyers won't pay extra for it.

The Fix:

• Study your comps carefully
• Match finishes to the neighborhood
• Don't add features buyers won't pay for
• Avoid personal taste; think resale

Mistake #4: Bad Contractor Management

The Problem: Unreliable contractors blow your timeline and budget.

The Fix:

• Vet contractors thoroughly (license, insurance, references)
• Put everything in a written contract
• Use a draw schedule tied to milestones
• Visit the job site regularly
• Have backup contractors ready

Mistake #5: Ignoring Holding Costs

The Problem: Every month you hold costs you money (mortgage, taxes, insurance, utilities).

The Fix:

• Build 6 months of holding costs into your analysis
• Push for fast contractor timelines
• Price to sell quickly, not maximize
• Have your agent ready before rehab finishes

Mistake #6: No Exit Strategy Backup

The Problem: The market shifts or your flip won't sell.

The Fix:

• Know your backup plan before you buy
• Can you rent it for positive cash flow?
• Can you seller-finance if needed?
• Can you reduce price and still break even?

Mistake #7: Skipping Due Diligence

The Problem: You miss title issues, liens, easements, or unpermitted work.

The Fix:

• Always get title insurance
• Pull permits from the city
• Check for HOA restrictions
• Survey the property if needed

Mistake #8: Going It Alone

The Problem: You try to do everything yourself and burn out or make costly errors.

The Fix:

• Build a team (contractor, agent, lender)
• Find a mentor or partner for your first deals
• Join a local REI group
• Accept that your time has value

The Bottom Line

Most flip failures are preventable. Stick to the numbers, build a good team, expect surprises, and stay disciplined. The profits will follow.