Fun fact: Flipping Properties is an established and successful side business that can help you earn a lot of profit. Not-So-Fun-Fact: Flipping properties takes a lot of planning, time, and effort. But if you are up for the commitment, you may hit a jackpot with fixing and flipping. Here's how you can create a realistic financial plan for your renovation project.
Why Should You Create a Financial Plan for Your Renovation
Creating a realistic financial plan before starting your real estate endeavors will serve as a solid roadmap to profits. You will need this roadmap to keep track of the funds you have spent and stay on budget. Also, your financial plan will help you demonstrate your expertise to lenders, investors, and potential partners. A realistic and comprehensive program will serve as an essential part of your strategy and assist you with the acquisition, renovations, and sale of your fix & flip property.
Creating The Financial Plan:
Here are the steps you need to follow to create your custom plan for your Fix and Flip properties.
Pro Tip: Treat your budget just like any other important step of flipping because it's that crucial. With a properly executed financial budget, not only will you have a successful outcome, but you will also maximize the profit. Let's start the planning.
Evaluate the property and project
Sit back and evaluate your property. You will need a thorough inspection of the property, so hire a professional if you have the budget because they may be able to uncover issues you were not aware of. A property evaluator will highlight the problem areas and other areas to renovate and repair. There are three parts that you will need to keep an eye on:
- Structural issues
- Outdated features
- Necessary upgrades
Any repairs needing professional help should be taken care of at the start of the renovation stage so that your property is up and ready to sell in record time.
Prioritize Repairs and Renovations
Don't just start haphazardly; the renovations that stand to gain the most ROI should go first. That should be the rule of thumb when preparing your financial budget. As an investor, your goal is to increase ROI. Apart from that, which repair will take the most time should also get the spotlight first, as time is always of the essence. Keep high-impact areas like the kitchen, bathroom, flooring, and curb appeal on your list. These are the functional areas of the house that can have a big effect on the property's value. One can also hire a project manager or general contractor to help plan and oversee the investment.
Once your plans are in motion, your next step is to research the cost of repairs. Again, you may hire a professional here or do the whole thing on your own if you have the needed expertise. Gather quotes from contractors, suppliers, and other specialists to assess the costs accurately or as close as possible. This step can take time, as you will be shopping around for materials, labor, permits, and dealing with other unexpected expenses.
Make Sure All Details are Included
The more detailed your financial plan is, the better it will be for you. Include all the tiny details that may or may not impact your cost. A thorough plan helps with organization as well as execution. Breaking your project into categories like material, labor, funding, and permits will also help you organize it better.
We all want the best of the best. However, it also pays to have realistic expectations and approaches when flipping properties. Make use of labor, materials, and upgrades that are within your budget. Moreover, any ventures that don’t add value to the property should be put on hold until the rest that do add value are completed. Just because something looks great, it doesn't mean it needs to be in the plan.
RCN Capital is dedicated to supporting your real estate endeavors and ensuring investors win. With our high expertise, we aim to increase your knowledge and provide you with all the resources you may need when fixing and flipping properties. Connect with us today to discuss your next real estate investment.