25 of the Most Common Rehab Mistakes

On Thursday May 19th, we hosted a hard hat tour at our recent development project in Petworth. We were joined by 15 of our friends from the DC, MD & VA Real Estate Investing Meetup and had a chance to provide a detailed walk through of the project and share insight into our acquisition, financing, construction and design process of this row house project. We broadcasted portions of the tour live on our Facebook page so feel free to watch, share and comment!

One of the questions that repeatedly came up was around common mistakes that many developers and flippers make while attempting to acquire and redevelop residential properties.  We've certainly made some of these mistakes so we decided to compile a list of what we consider 25 of the most common home flip blunders.  This is obviously not a full list and might not apply in all cases but should serve as a good starting point. 

  1. Relying only on the information provided by the agent/wholeseller regarding the property without an independent verification. 
  2. Failure to check tax and lien records prior to acquisition.
  3. Not understanding property's zoning and its implications.
  4. Failure to obtain tenant rights and agreements prior to acquisition. 
  5. Relying on development estimates and after repair values (ARV) provided by the selling party.
  6. Failure to complete a thorough inspection and engineering report on the property. 
  7. Not getting bids from multiple general contractors.
  8. Insufficient budget for construction costs.
  9. Not having a contingency budget for unanticipated construction items.
  10. Underestimating overall project timeframes.
  11. Failure to understand permitting process, costs and timeframes. 
  12. Not working closely with an experienced architect and designer from the start to maximize property's potential and use. 
  13. Not having the general contractor and architect selected and in-sync with each other prior to acquisition. 
  14. Failure to agree on a SOW/contract with the general contractor.
  15. Not having a gap loan or reserved cash until the first construction draw is funded. 
  16. Making last minute changes to architect drawings without understanding implications. 
  17. Failure to display all the construction permits onsite. 
  18. Failure to make acquaintances with neighbors and the community.
  19. Not reviewing budgets on a weekly basis with the general contractor/project manager. 
  20. Failure to plan ahead with material purchases to keep costs low. 
  21. Not marketing in the neighborhood in the search of the next property/lead. 
  22. Failure to create a buzz with "Coming Soon" signs, flyers and events. 
  23. Not engaging with several active local agents to understand market conditions and ideal listing price. 
  24. Not staging the property.
  25. Low budget and unprofessional listing photos.