INVESTORS’ CORNER: 10 Rules for staying in the flipping business

By Jeff Johnson

1. Thou shalt not overpay for investment property – Every successful investor knows you make your money when you buy property, not when you sell it. Do not rely on market escalation for your profit……ever.
2. Thou shalt not underestimate repairs – The only other flipping sin that will put you on the fast track to losing money in a real estate deal. Always do your own due diligence!
3. Thou shalt not go behind another investor’s back and steal a deal or contacts or contractors – There is no faster way to get your name blackballed in the investor community. And it is a very small community, believe it or not.
4. Thou shalt always show up to the closing table – Trust in this business is everything. If you tell someone you will buy a deal, you better show up to the closing table. Backing out on a deal is another way to get blackballed quickly.
5. Thou shalt always prepare a scope of work for rehab – Without a scope of work and a cost attached to it, your project WILL cost more than you expect.
6. Thou shalt not use unprofessional contractors or trades – This will almost always cost you more than you save in the long run due to delays or poor workmanship… not to mention general frustration!
7. Thou shalt manage your contractors well and pay them their due wages – A properly managed and well-paid contractor is a team member. A poorly managed and underpaid contractor is a headache.
8. Thou shalt not do shoddy work nor cut corners – Your reputation will eventually catch up to you…. Good or bad.
9. Thou shalt hire a professional realtor to market and sell thy property – Buyer’s agents generally avoid flat fee listings or listings where they know they are going to do most of the work.
10. Thou shalt put relationships and reputation above profit – If you take care of others and their needs, your needs generally are met, and your name will have value with others.

Jeff Johnson, President of New Path Properties, [email protected], is a member of Metrolina Real Estate Investors Association, www.MetrolinaREIA.com and Sub-Group Leader.