Here are some of the things that caused me to fail and lose money on my Fix and Flip Properties

Why I Nearly Went Broke Flipping Houses, Broken Into, Robbed, and Unsured

Here are some of the things that caused me to fail and lose money on my Fix and Flip Properties

• I didn’t check the back taxes. On one flip, I found out there was $20,000 in property taxes owed. That was a tough lesson.
• I underestimated how long it would take to fix up the property. I planned for 30 days, but it ended up taking 180. That hurt!
• I bought a house in a remote area called Sun City Festival. It was a nice place, but the nearest store was 25 miles away. It took 8 months to sell, and I just broke even.
• I trusted a contractor to do the job right, but he didn’t. He kept the money and even stole the appliances.
• I bought a condo and paid too much from the start. When I tried to sell, I realized I’d lose $10,000. So, I rented it out for two years before selling.
• I hired the wrong contractor to do the work. People often ask me how to find a good contractor. I usually get referrals from friends or other professionals I trust. My top rule is: “Don’t hire anyone who has nothing to lose if they mess up.” In other words, avoid hiring someone with no assets or stability. There’s a running joke in the trades that some plumbers, tile layers, and painters have drinking problems, which is why they work for themselves. I’ve actually hired tile layers who were so drunk they installed tiles upside down. On the other hand, I know a great tile layer who’s been sober for five years and does excellent work. Every time I hire him, I ask him directly if he’s still sober, and so far, he says yes. It took me a long time and a lot of money to learn that many people claim they can do the job, but just want to take advantage of you. Craigslist is full of these types. Most of the time, I use the biggest home improvement company for carpet, tile, appliances, and counters. They have a lot to lose if something goes wrong, and they make sure the work is done right. Who is it? Home Depot. Seriously, use them—they get the job done, and sometimes they have great sales on appliances, carpets, and countertops. It might cost a bit more, but I don’t mind. The work is done right, on time, and comes with a warranty.
• Never pay for labor in advance. Ignoring this rule has cost me a lot of money.
• Ask for references and actually call them. Hopefully, the reference isn’t just their mother.
• Don’t hire relatives. In my experience, they’re the most likely to take advantage of you.
• Buy appliances yourself and have the company handle the installation.
• Check their License. If someone says they’re licensed, make sure to verify it.
• Failed to get homeowner’s insurance. Get insurance on your property as soon as possible. But be aware: most standard homeowner’s policies have an exclusion. If the home is vacant for more than 30 days, the coverage ends. You can get a rider to extend coverage, so ask your agent about it. I learned this the hard way when one of my flips was broken into, and tools, doors, and appliances were stolen. I thought, “Hot doggie, I have insurance.” But when I called, the company kindly pointed out that the policy says, “no coverage after 30 days of vacancy” (you are out of luck). That was an expensive lesson. You are going to assume that your flip will be broken into and that items will be stolen.  So, plan for it. Plan to walk on the property every day.  Even if no one is working.  Need to keep a close eye on the home. I have come to flips to find the following: someone living in the home, the door unlocked, appliances stolen, the $1,000 front door gone, the neighbor swimming in the pool, the A/C gone, and the pool equipment gone.  It is tough out there. Things are going to get stolen. If it’s a rough area, I wait to bring in appliances until the new owner moves in. I’ll put a picture on the counter showing what’s coming and say it’s backordered.

Over the past 30 years, I’ve flipped many properties.  In most cases, I’ve made money on every flip.  It’s been a joy to do his work, and my wife has come along with the journey. 

Matt Prosory RI/MLO/Broker
NCO Enterprises LLC
Private Hard Money
DBA Setabay/SetabayLoan/Level 4 Funding
26731 N 90th Drive
Peoria AZ 85383
Matt@Level4Funding.com
Telephone: 623-582-4444
NMLS 2062278 NMLS 1118493

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