Interested in house flipping in Jacksonville? Prepare to enter one of the most lucrative markets in Florida.
Jacksonville is the largest city by land area in the contiguous U.S., giving investors plenty of opportunity to spread out and share the wealth. However, every market comes with its challenges.
Read on for the five most common house-flipping mistakes in Jacksonville, plus strategies for avoiding them.
Start your application with Park Place Finance.1. Choosing the wrong market
House flipping is much more than finding a good deal on a property.
In Jacksonville’s vast market, one common mistake investors make is choosing an area that doesn’t align with their target buyer’s needs.
The city is home to hundreds of neighborhoods with various demographics and price points, including high-end luxury properties and more affordable housing options.
The wrong choice can lead to:
- Longer listing times
- Fewer offers
- Price reductions
- Lower demand
- Mismatched renovation style
- Missed opportunities
How to avoid this mistake
Fix-and-flip investors have to do their research ahead of time.
This involves:
- Determining who you want to sell to, such as a retiree or first-time buyer
- Understanding local growth trends and market conditions
- Working with local real estate agents
No matter the market, your first step as an investor should always be to identify your goals and needs so you choose the right property.
Related: Sunshine State Hotspots: Top 5 Cities for Profitable House Flipping in Florida for 2024
2. Overpaying for a property
In competitive markets, getting caught up in a property and ignoring your budget is easy.
Overpaying is one of the most common mistakes house flippers make, and it can severely impact your profit margin.
Intense competition can lead to:
- Bidding wars
- “Emotional investing” after getting attached to a certain property
- Overestimating a property’s after-repair value (ARV)
Remember that overpaying immediately compresses your profits from the start, leaving you with little room for error throughout the rest of the project.
How to avoid this mistake
The key to avoiding overpaying is to set a firm budget and stick to it.
The best way to approach this includes:
- Starting with a property inspection
- Calculating the property’s ARV
- Sticking to the 70% rule for house flips
- Preparing to walk away if needed
Try to control your emotions, even if you’re tempted to stretch your budget for a “dream” property.
3. Underestimating renovation costs
One of the easiest mistakes for flippers is underestimating renovation costs.
Each market has its own unique challenges, and for Jacksonville, one of these challenges is the city’s hot, humid climate and potential for weather-related damage.
As a result, Jacksonville homes may have:
- Mold and mildew growth
- Water damage from rain and hurricanes
- Aging plumbing, electrical, or HVAC systems
Homes that appear to be great deals sometimes have hidden, costly issues that chip away at your budget and timeline.
How to avoid this mistake
In addition to careful budgeting and a thorough inspection, add a financial buffer of at least 10% to 20% to your projected costs to cover unexpected expenses.
Consulting with local contractors on common issues and cost estimates also can help you prepare.
4. Poor timing
Buyer demand fluctuates throughout the year and generally correlates with specific market influences.
If investors time the market incorrectly, they risk lowering their profits due to higher holding costs and less buyer interest.
The following factors largely influence Jacksonville’s demand:
- Higher demand in the spring and summer months
- Fluctuating demand during hurricane season, which peaks from August through October
Of course, the market is also influenced by typical economic factors such as interest rates and consumer confidence.
How to avoid this mistake
Plan your flip project with Jacksonville’s real estate cycles in mind.
This includes:
- Completing your flip and listing the property when buyer demand is at its highest
- Avoiding listing your property during peak hurricane season
- Setting realistic renovation timelines
- Keeping an eye on broader economic and local market trends
A local real estate agent can help you by providing up-to-date data on supply, demand, and selling times.
5. Failing to secure the right financing
Real estate investors rely on fast, flexible capital to secure the right properties at the right time.
New house flippers may make the mistake of turning to traditional financing options such as banks, but this option often falls short for the following reasons:
- The approval process can take several weeks or months
- Strict credit and income requirements
- Rigid terms that don’t accommodate short-term needs or renovation costs
Traditional financing can put investors at a significant disadvantage, resulting in missed opportunities or project delays.
But what’s the alternative?
How to avoid this mistake
Hard money loans are designed to meet the needs of real estate investors and house flippers through the following approach:
- Approval and funding within days rather than weeks or months
- Funding for both the property purchase and renovations
- Short-term and long-term loan options based on project type
- Loans that are secured by the property rather than based on the borrower’s finances and credit
How to choose a hard money lender
Not all hard money lenders are created equal.
For fix-and-flip investments, especially, it’s important to choose a lender who has experience with these types of investments and can structure loans to meet the unique needs of your project.
Park Place Finance can close in three to five business days.
Our eligible loan types include:
- Purchase and rehab
- Refinance and rehab
- Buy and flip
- Buy and hold
We specialize in residential real estate and can fund various properties in 47 states.
Get started with Park Place Finance
The Park Place Finance team has closed over 4,000 loans and funded over $1 billion since 2006.
We love helping flippers of all experience levels, and we know how to ensure that your next project is profitable!
Apply now with our quick online form, or give us a call at (866) 407-1599 to speak with an account executive.