In this instructional video, seasoned Southern California house flipper Joe Homs outlines four common pitfalls that cause investors to lose money on a house flip and offers practical advice to avoid them. He explains that overpaying for the purchase price erodes profit, that expensive hard‑money loans (often around 10% interest plus 2 points) can quickly eat returns if the project drags beyond 2‑3 months, that hiring the wrong contractor—especially one who demands large upfront fees and fails to deliver permits—creates costly delays, and that over‑improving the property with personal‑taste upgrades leads to overspending and reduced resale appeal. Throughout, Homs stresses the importance of diligent due‑diligence, assembling a reliable team, limiting hold time, paying contractors only after work is completed, and choosing broadly appealing, cost‑effective finishes. He invites viewers to comment on additional mistakes, watch related videos on profitable flips, and contact him for personalized help.
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In today's video, I'm going to give you 4 reasons why you're going to lose money on your next flip. Coming up next. You don't want to lose a lot of money, but we sure want to know how it's possible so we can avoid doing it. After all, making a mistake is one of the biggest fears that keep people from getting started flipping houses. Let's get into it. Welcome back. I'm Joe Homs. I've flipped hundreds of homes in Southern California. I made this channel to help the new and experienced investor. Make sure that you subscribe, like, and share with your friends. Number 1, you paid too much. Not unusual. You just have to be careful. You're going to make the most money on a flip on the purchase of the property. So if you get overly excited and somebody convinces you because they're a good salesperson that you should buy this property At this sales price, it may be a little bit too high for you. So you need to be careful what you pay for the property. Number 2, expensive hard money. You need to shop around. I could tell you the average, if you're a first-time flipper, is around 10%, usually around 2 points. If you're getting quoted more than that, you're at the wrong place. Hard money people are a dime a dozen. They're out there. There's many of them out there. So do your due diligence, shop around, make sure that you have the right person. And remember, have all your team in place ready to go. So the minute you close, the next day your contractor should be there and rehabbing that property. Hard money is going to kill you if you hold on to that property for 6 months or more. It's definitely going to kill you. So you want to get this project done anywhere between 2 and 3 months. Number 3, you've hired the wrong contractor. And I literally got a call the other day from somebody from my YouTube channel and said that they're doing an ADU and the contractor wanted all this money up front. And I never pay a contractor too much money up front. In fact, I don't pay my contractors any money up front. They do the work and then I pay them right after that. So make sure you're on the same page with your contractor. So his story was that the contractor was going to get the permit, he wanted all these fees up front including his fee for doing all this. He paid him all that. Here we are 2 months later, hard money situation, he still has not received— The permit. the permit on that property. And so, you know, you have to think, well, what do I do? You know, you're going to have to get another contractor if this one isn't performing for you. And he wanted to know if he'd get the money back from the contractor. And I said, you know, you can ask, you can always ask, but, you know, good luck trying to get it back. So be careful with your contractors. Number 4, you've over-improved the property. Perfect first-time flipper mistake. Your mentality is, you know, what would I like? What would I enjoy in this house? You know, what are the colors? You know, is that faucet that I'm putting in the kitchen something that I would like personally? You're making big mistakes when you're thinking like that. You need to go in and put the material in that everybody in the world is going to like. at a reasonable price and then move on. Because if you overexpense and spend more than you thought you were going to spend, you're going to lose money. I'd love to hear about some more mistakes that you should be avoiding while flipping houses. Let me know in the comments below. There are 1,000 different mistakes that can cost you on a house flip. You can protect yourself from losing money by simply buying the house for as cheap as possible. That builds in a big safety net. Then try to keep from making too many mistakes. If you want to know 5 secrets to choosing a profitable house flip, click on this video right here. If you want to know more about how to flip a house, reach out to me directly. I'm always here to help.
