1. Forgetting about building permits
A little unlicensed construction might not seem like a big deal, but permit problems can lead to lawsuits if potential buyers (or their potential lenders) discover defects late in the process of a sale. If you’re working on your home’s structure, plumbing, gas or electrical systems, you’re probably going to need the city’s stamp of approval.
2. Skipping a conversation with a local real estate expert
The Internet is a marvelous source of market information, but it shouldn’t be your only source. A local pro can help you with everything from finding your flip in the first place to puzzling out its ARV (After-Repair Value).
3. Going overboard with fancy finishes
High-end flips come with high stakes: If buyers don’t love your big-ticket design decisions as much as you do, they may balk at your big ticket altogether.
4. Neglecting easy fixes
Sure, a gut renovation that gives an old home an open floor plan delivers more “wow” than swapping out beat-up old doorknobs and light switches—but a discerning buyer notices these things, too (and they’re easy on your budget).
5. Jumping into a do-or-die flip
If the real estate market in your region takes a sudden turn and you find the need to change your strategy—say, by offering your project as a rental property until prices recover—you’ll need to be prepared to hold tight until its eventual sale. Flips might feel like sprints, but they can be marathons.
6. Staging without a pro (at first)
Hiring a home stager to prep your first flip for open houses is a spend that will serve you well in the long run: Pay close attention to how they show your property to its best advantage (and ask a lot of questions!), then keep those tricks in mind for future projects.
7. Racing the clock
What’s even worse than making mortgage payment after mortgage payment on a home that isn’t supposed to be yours for long? Falling short of the profit you should have made because you prioritized speed over a job well done. Psst: Buyers (and the inspectors they’ll call in) can tell the difference.
8. Starting a dozen projects at once
It’s undeniably satisfying to step away from a frustrating bit of renovation and turn to another task—a flipper’s work is rarely done, after all—but it’s also a surefire way to end up in the middle of a half-finished mess. The only way to make sure you’ve dotted your I’s and crossed your T’s is to follow projects through to completion, no matter how mind-numbingly tedious they might be.
9. Ignoring the “70 Percent Rule”
It’s a tried and true formula in the real-estate investment biz: Take your ARV, multiply it by 0.7 and subtract your repair cost estimate. That’s the maximum amount you should be paying for a property—period. The rule is sacred because it keeps you safe. After financing, carrying costs and out-of-the-blue expenses, you’ll most likely still profit from your flip.
10. Venturing into “eraser math”
Speaking of figures, the temptation to overestimate your potential property’s ARV in order to justify a higher maximum allowable offer (MAO) can be strong, particularly for first-time flippers who find themselves asked to pay slightly more than they expected—but it’s just not worth it. Factors beyond your control could lower your ARV by up to 20 percent by the time you’re ready to sell, according to some experts—and if you’ve already overshot your original estimates, the math will be even uglier.
11. Neglecting the landscaping
Overhauling an entire lot’s worth of greenery isn’t cheap, particularly if it’s been neglected for a long time, but TLC that increases a property’s curb appeal is a worthwhile line item—it can add up to 10 percent to your ARV! No, you don’t need to plant a forest and build a water feature, but cleanup, repairs and a bit of diligent gardening can go a long way.
12. OD’ing on DIY
As the Chinese philosopher Lao Tzu wrote in the Tao Te Ching, “The wise man is one who knows what he does not know.” As a real estate pro would put it, the wise first-time flipper is one who knows that he or she must not try to remodel an entire kitchen by herself.
13. Waiving a professional inspection
A thorough inspection of a prospective property will cost hundreds of dollars, but it can save thousands more—and help you develop your own checklist for flips to come.
14. Ignoring the neighbors
Buying the underpriced, ugliest house on the block is many a flipper’s favorite trick—but it’s easy to forget that though your place will be rehabbed and lovely by the time you list, other eyesores in the same neighborhood can impact its desirability (there’s a second-ugliest house out there, too). You want a diamond in the rough, but it shouldn’t be too rough.
15. Cutting corners in the bathroom
If your floor plan and budget can accommodate a full, modern bath, it’s worth your time. Many real estate experts argue that bathroom renovations provide returns on investment (ROI) that are comparable to kitchen renovations. A woefully outdated water closet, by contrast, can sink a sale.
16. Demolishing cabinets that can be refaced
Before you obliterate a kitchen that’s seen better days, consider stripping and refinishing lackluster surfaces and upgrading fixtures. A cleverly executed face-lift could be enough to distinguish your property from comparable listings in the neighborhood.
17. Not protecting your investment
Before you start any flip or remodel make sure that your hard earned money is protected. Accidents, vandalism, and the unexpected can leave you in a tremendous financial struggle. Make sure the improvements and your property is protected by a builders risk policy so that you know that you know. Speak with Sterling Peaks Insurance to make sure you have the coverage you need.
Homeowners and flippers often believe their existing home insurance policy covers all exposures. Yet, remodeling builders risk insurance can offer coverage that is more comprehensive and protect you from gaps you may not known existed. Here are just five benefits to insuring that your home remodeling project is with a builders risk insurance policy when undergoing renovations:
Builders risk insurance coverage not only offers a variety of benefits to you, it also provides you with peace of mind. If you are reading this there’s a good chance you are planning to renovate. In fact, according to CNBC, nearly two-thirds of consumers are planning to remodel their homes. Through builders risk, you have the opportunity to protect what matters most to you your home.
Whether you are currently planning to remodel now, or in the future, the question is will my homeowners insurance protect me during construction renovation should a claim arise? Learn the answer to this question as well as what coverages you may not even realize you need when you download Is Homeowners Insurance Enough? A Builders Risk Coverage Comparison.
This is intended as a general description of certain types of insurance and services available. Your policy is the contract that specifically and fully describes your coverage. The description of the policy provisions gives a broad overview of coverages and does not revise or amend the policy.
The concept of small living isn’t something only empty-nesters enjoy anymore. A growing number of people want to own a home, but it may not be feasible in their bigger financial picture. One solution? Small-space living.
Research shows that 68% of homeowners who live in tiny homes don’t have a mortgage, compared to 29% of all homeowners in the nation who don’t have mortgages.
That doesn’t mean you need to move into a tiny or portable home, however. Aside from eliminating or lowering your mortgage, simply moving into a smaller home can have additional benefits. These scaled-down spaces require much less upkeep. Utilities typically cost less in smaller homes, and there are fewer daily chores.
Is living in a downsized home for you? If so, here are some tips to get you started in living this lifestyle:
Live with purpose and pleasure
Whittling down your belongings to fit them in a smaller home can bring more meaning to your day-to-day life. When you downsize, you’re surrounded by things you love in your new home — in part because you have to be. Before you move, look at your current furniture and determine what you absolutely can’t live without. Be sure to measure the pieces you choose to keep, and ask your real estate agent for the dimensions of each room in your new, smaller home.
Envision or draw out how much space your current furniture will take up in your new home. This helps you learn what to expect in terms of which current possessions you can fit easily into the smaller place. By doing so, you’ll know if the sofa is too large for the living room or if you need to pare down your bedroom set and take only the bed and dresser. The goal is to move comfortably through your home.
Downsizing mantra: Only keep what serves you
Go through your current home room by room and discard items you haven’t used in the last year. If it hasn’t been used by now, it’s likely remain unused in the future. Small houses are appealing because you have to be more selective about what fits in them — as a result, every item has a purpose. There are no exercise bikes you plan to ride eventually or books you’ll get to someday. Truthfully, it can be a relief not to be reminded of all the “stuff” you’ve yet to do. Small living works because it can keep you in the present and committed to the essentials.
Streamlining small home living
Once you’ve moved into your new home, you’ll start adjusting to your new “big lifestyle”. Staying organized and maximizing your space will become important parts of living harmoniously in a smaller space.
It’s important to organize your small home from the start. Because your space is limited, your organizing decisions matter. If you plan to organize things later, you may be tempted to keep putting it off. Living in small space can be challenging if it’s not organized. Make organization a priority when you move in.
Designate specific storage spaces for everything you own and use accessories like drawer organizers, shoe caddies and vacuum bags to keep your home tidy. When you use something, put it back immediately when you’re done. This cuts down on visual clutter and ensures you have a system that keeps you organized for the long haul.
Living in a smaller home has some unexpected lifestyle bonuses, and it encourages creativity, especially when it comes to space-saving solutions. For example, your house’s layout may not feature distinct areas with designated purposes, such as a pantry or linen closet, but you can make them with curtains and moveable walls. If you have a loft, transform the area under the stairs into a closet or food-storage area. A small house is the ideal place for you to bring your innovative ideas to life.
The benefits of a downsized lifestyle are plentiful. If you’re considering moving to a small space, learn more about how to protect it with insurance from Sterling Peaks Insurance
 “Tiny Houses and People Who Live in Them,” The Tiny Life.
SPI Reflections Blog
Our blog is about educating our customers and the public about important insurance information that we feel is meaningful.