One of the most popular ways to make money with real estate investing is through home flipping. Flipping can provide investors with significant returns in a relatively short amount of time, and these returns can then serve as a launchpad for other types of investments. If you aren’t experienced with home flipping, you will want to familiarize yourself with the various steps of the flipping process in order to get the most out of your next investment. Knowing what it takes to have a successful flip will increase your chances of making a good return. Interested in learning more? Here are some the ways you can increase your ROI with home flipping.
Conduct thorough research
Finding success with a fix and flip project starts well before you make your first purchase. Since location is one of the most important factors in a real estate deal, it’s certain to have a huge impact on the return of your home flipping investment. That’s why it’s crucial to take time to research different real estate markets before deciding where you will invest your hard earned money. The best markets for flipping will be those that are experiencing high growth, or those with a solid job market that people will flock to. In terms of the home’s surrounding area, ideally it should be located in a safe neighborhood that has access to amenities like shopping centers and entertainment, as well as good schools for family-oriented buyers.
Choose the right renovations
Another key to having a successful home flip is picking the right renovations to perform on the property. The renovations you make should maximize the value added to the property while costing you relatively little. Generally, the kitchen and bathrooms will be some of the best areas to focus on, since they will have the biggest impact on the home’s look and feel. Besides that, some easy upgrades to make include taking care of landscaping, applying a fresh coat of paint to the rooms, or updating the exterior of the home with new siding (a fresh coat of paint goes a long way here too). When budgeting for renovations, it can be a good idea to leave an extra 10% buffer in your estimates to take care of any unexpected costs that may arise. This helps ensure you still have a decent profit margin built into your deal should anything go awry.
Plan and manage your timeline carefully
Time is an important factor in home flipping, since the longer it takes for you to complete your project the more you will be paying in holding costs like the mortgage, insurance, taxes, and utilities. In order to ensure the project gets completed on time, it’s important to come up with a carefully crafted plan before you begin any of the work. Start by making sure you have all permits and licenses in order so that you can properly begin renovations. Then, you should work with a qualified contractor to come up with a realistic timeline for the completion of all the work. It’s also important to be proactive and stay on top of things as work gets completed, so that you can handle any issues or delays that may come up in the renovation process.
Lots of new investors don’t take into consideration the amount of time it will take to sell a property after renovations are completed. You can look up the average number of days a home stays on the market in your chosen area to get a better idea of this. Be sure to factor it into your project’s timeline, and be prepared to pay your holding costs for this duration.
Take some time to market the property
The way that you market your property when it comes time to sell will have a huge impact on your final sale value. First, you should ensure that you’ve set the correct sale price for your property so you can attract buyers while still getting a solid return on your investment. You can work with an experienced real estate agent to find a price that is just right for this purpose. You’ll also likely be working with the real estate agent to get your property on the NMLS, where buyers and their real estate agents can view the listing. In order to catch the attention of potential buyers, it may be a good idea to hire a professional photographer to take appealing photos of your property for the listing. You should also consider staging the property to further pique the interests of those interested in your property. Combining all these strategies can net you a higher return, and make all the time and effort you put into your project all the more worthwhile.
Obtain the right financing for your project
The final tip we have to give for potential home flippers is to take time and find the right financing program for your investment. A traditional loan may not be the best solution here, since the long terms and strict requirements aren’t suited for flipping where you’ll be looking to renovate and sell the property quickly. Instead you will want to look towards alternative financing solutions like hard money or private money loans. Private money lenders tend to have less strict requirements on the properties they’re willing to lend on, and some lenders offer programs specifically designed for flipping which cover the cost of renovations along with the acquisition costs of the property. Be sure to consider all your options and compare terms, interest rates, and other benefits of each financing program.
The easiest way to save on your next investment is to obtain financing from a real estate lender that can get you the best leverages and rates. RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors. If you are an investor looking to finance a home flip, RCN Capital has competitive loan options available.Connect with us todayto discuss your next real estate investment.