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Buying old houses at wholesale price, fixing them up, and then selling them at retail price remains one of the easiest ways to make big profits in real estate.

If you are prepared to put in some hard work, property rehabbing remains one of the easiest ways to profit from real estate.

Unfortunately, would be rehabbers can be easily seduced by the promise of fast money. You see it's not simply a case of buying an old house, fixing it and selling it for massive profits.

Back in the mid 1990's when I started to fix-up my first investment home, I soon discovered how easily things could go wrong. The following are 8 of the biggest mistakes you can make when fixing up houses. How do I know this to be the case? Yep, you guessed it. I've made them all when starting out.

BIG MISTAKE #1: THIS IS A 'GET RICH QUICK' STRATEGY

Whilst adding value to property can rapidly increase your wealth, it is not a miracle cure nor is it a 'get rich quick' scheme. It still requires time, dedication and effort. The results that you ultimately achieve will reflect on your commitment to these three areas.

BIG MISTAKE #2: A LACK OF EXTENSIVE RESEARCH

Many years ago I worked for a paint manufacturer and learnt a valuable lesson: Painting is 80 per cent preparation and 20 per cent application.

This very same rule applies to buying and rehabbing property. Ninety per cent of your time will be spent locating and purchasing the property itself. In this instance, your preparation will be research, viewing, negotiating and more research.

BIG MISTAKE #3: DO ALL THE WORK YOURSLEF TO SAVE MONEY

As rehabbers, we can easily convince ourselves to do the work and save a few dollars. This train of thought is fraught with danger on two levels.

Firstly, if the level of workmanship is substandard then this can and will affect your resale price. Experience has taught me one very important lesson: If you're no good at it yourself, pay an expert to do it.

The second danger refers to time leverage. It is false economy to save yourself $35 dollars per hour by doing it yourself if you earn $50 per hour.

BIG MISTAKE #4: INSUFFICIENT CASH FLOW

As with any business venture, cash flow is king. There is no point having a potential $50,000 profit up your sleeve if you can't pay your bills. Unless you have sufficient cash reserves, I highly recommend that you do two or three projects and put the money aside before you rush out and quit your job.

BIG MISTAKE #5: NO EXIT STRATEGY

There will be times when, despite your meticulous research and planning, the property doesn't sell. External influences that are beyond your control pop up from time to time. Be prepared for this with an exit strategy and you'll be fine.

Firstly, never enter a project if you cannot afford any unforeseen holding costs.

Secondly, there is no shame in holding a good property. If the market doesn't agree with you at that particular time, then rent it out for twelve months.

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