There's no doubt that you can make significant amounts of money by buying, repairing, and reselling houses. However, it takes knowledge, time, and careful planning to make maximum profits in a minimum amount of time, and if you make a mistake along the way, it can make a serious dent in your bottom line.

1. Buy Wholesale

The first step in avoiding costly mistakes is to arm yourself with as much knowledge of your target area as possible. You need to know the ultimate sales price of a property BEFORE you even think about making an offer. Think of yourself as a retailer, buying as close to wholesale as you can and then selling retail once the work has been completed.

2. Estimate Accurately

Whether you do the fix-up work yourself or contract it out, besides knowing how much the home will eventually sell for, you'll need to get a strong handle on how much repair a home will require and how much those repairs will cost. This can be a huge mistake if you don't calculate the repair costs as accurately as possible. Of course, you're going to find surprises along the way, but if you've added a certain percentage of "fudge factor" into your estimate, those surprises shouldn't be enough to wipe out your profit at sale time.

3. Plan Ahead

Once you begin seriously considering a home for purchase, another big mistake is not to start getting your contractors lined up to quickly get in and do the work that will be required for resale. Beginning investors often wait until closing to start lining up their contractors, only to find that they're already booked on other jobs and won't be able to get to their project for weeks or months. As soon as your sales transaction has entered escrow, get on the phone and start mobilizing your home renovation team. That way, you'll be ready to begin work as soon as the sale closes, which will put more money in your pocket through a faster resale.

4. Shop Around

Another common mistake that can hurt your overall bottom line is not shopping hard for materials. You may have to hire contractors to do the work, but that doesn't necessarily mean those contractors will shop hard for the best buys on things like paint, appliances, fixtures, carpet, and all the other materials and supplies that will be necessary to upgrade and repair a home for resale. You can save hundreds or even thousands of dollars by shopping for materials instead of either just buying them or having your contractors buy them.

5. Scrutinize Work

Finally, another common mistake, especially if you're having contractors do the work, is to just let a project continue without constantly monitoring its progress. That means giving up your weekend plans for awhile to either work on the property or to monitor how your contractors are coming along.

Remember, buying, repairing, and reselling homes is a business, and requires just as much business sense and attention to detail as any other commercial enterprise. Avoiding common mistakes such as the ones we've mentioned can add thousands of dollars to your bottom line on each property.