6 Common Fix and Flip Mistakes: How to Help Clients Succeed

Let’s be real—fix and flip projects look glamorous on TV, but those who've been in the trenches know it’s not as simple as buying a property, painting a new coat on it, and selling it off for a tremendous gain. The fact is, that flipping houses is a complex process that requires careful planning, a solid team, and a clear strategy. And as a broker, you're ideally positioned to guide your clients away from expensive errors and into bigger profits.

In this blog, we're going to take you through six common fix-and-flip mistakes and how you can steer your clients away from them. Whether they're seasoned investors or first-time flippers, your guidance can be the difference between their success and failure.

1. Overspending or Underestimating Costs

Failing to budget in fix and flip ventures is perhaps the biggest mistake. Additional expenses can pop up at any phase, from repair surprises to permitting holdups. Your customers have to account for these expenditures themselves. If not, they can exhaust their budgets and diminish their earnings.

How Brokers Can Help:

• Educate Your Clients: Explain the importance of setting aside a contingency fund (typically 10-20% of the project budget) for unexpected costs.
• Provide Resources: Share budgeting templates or tools to help your clients track expenses.
• Recommend Lenders: Partner with lenders like RCN Capital that offer flexible financing options to cover both purchase and renovation costs.

Pro Tip: Encourage your clients to invest no more than 70% of the After-Repair Value (ARV) in the purchase of the property and repairs. This leaves them with a sufficient buffer to make a profit.

2. Forgetting to Purchase Property Insurance

It's easy to get caught up in the thrill of a new project, but skipping fix and flip insurance is a rookie error. Property insurance covers your clients' investments by paying for damages that might happen during the renovation process.

Why Insurance Matters:

• Risk Mitigation: Insurance safeguards your clients’ investments against unforeseen events like fires, theft, or vandalism.
• Peace of Mind: Knowing their property is protected allows your clients to focus on the renovation without unnecessary stress.

How Brokers Can Help:

• Recommend Insurers: Connect your clients with reputable insurance providers who specialize in insurance for flipping houses.
• Explain Coverage Options: Help your clients understand the different types of coverage available and choose the one that best fits their needs.

3. Going in Alone

Flipping a house is a team effort. Even the most skilled investors can’t do it all on their own. From contractors to realtors, having a reliable team is essential for staying on schedule and within budget.

How Brokers Can Help:

• Build Your Network: Establish relationships with trusted contractors, inspectors, and other professionals in your area.
• Vet Team Members: Help your clients find experienced professionals who can deliver quality work on time.
• Facilitate Communication: Act as a liaison between your clients and their team to ensure everyone is on the same page.

Pro Tip: Encourage your clients to meet with potential team members before hiring them. A good working relationship is just as important as experience.

4. Taking on Too Big a Project

For first-time flippers, it’s tempting to go big or go home. However, tackling too big or complex of a project can result in expensive errors and setbacks.

How Brokers Can Help:

• Start Small: Recommend properties that need minimal work for first-time flippers.
• Set Realistic Goals: Help your clients understand their limitations and focus on manageable projects.
• Provide Guidance: Share your expertise to help your clients identify properties with strong profit potential.

Pro Tip: Remind your clients that flipping houses is a learning process. Starting small allows them to gain experience and build confidence for larger projects down the road.

5. Working with the Wrong Partner

House flipping is stressful enough without the added ingredients of personality conflict or mismatched expectations. Be it a friend, family member, or business partner, dealing with the wrong person can tank the whole project.

How Brokers Can Help:

• Encourage Professional Partnerships: Advise your clients to work with experienced professionals rather than friends or family.
• Vet Potential Partners: Help your clients evaluate potential partners to ensure they’re a good fit.
• Set Clear Expectations: Encourage your clients to establish clear roles and responsibilities from the start.

Pro Tip: If clients have a partner they are working with, advise them to make it all written, including profit-sharing arrangements and exit plans.

6. Lack of a Defined Exit Strategy

Perhaps the most underutilized part of house flipping is the use of an exit strategy. Without one, your clients will be left sitting on an unsold property or losing money on carrying costs.

How Brokers Can Help:

• Set a Realistic Timeline: Work with your clients to create a timeline that includes purchase, renovation, and sale deadlines.
• Price It Right: Help your clients determine the right listing price by analyzing comparable properties in the area.
• Plan for Contingencies: Advise your clients to have a backup plan, such as renting the property if it doesn’t sell right away.

Pro Tip: Encourage your clients to consult with a realtor early in the process to get a realistic idea of the property’s ARV and market demand.

House flipping can be very profitable, but it's not without its pitfalls. By assisting your clients in avoiding these six most common fix-and-flip errors, you can position them for success and create stronger, more lucrative relationships.

Why Brokers Should Partner With RCN Capital

At RCN Capital, we know the special needs of real estate investors—and the brokers that serve them. Here's why brokers prefer to work with us:

• Flexible Programs: From fix-and-flip financing to long-term rental funding, we provide solutions to suit your client's requirements.
• Fast Closings: We can close loans in as few as 10 business days, helping your clients move quickly on opportunities.
• Broker-Friendly: We value our relationships with brokers and offer competitive commissions, fast approvals, and dedicated support.

By partnering with RCN Capital, you can provide your clients with the financing solutions they need to succeed in the competitive world of real estate investing.

Ready to take your brokerage to new heights? Connect with us today to discuss our real estate financing solutions and how we can help you grow your business.