Here’s Why Fix and Flip Investing Makes Sense in Today’s Market

The real estate market today is more competitive than ever. Factors such as high interest rates and steadily increasing home prices mean fewer new properties are sold, and low inventory means high competition in many markets. However, there is a very good solution to today’s housing problem, which comes in the form of renovated properties. These homes are typically sold for less than their newer counterparts, and can also be a great opportunity for investors. Continue reading as we explore why fix and flip investing makes perfect sense in today’s real estate market.

Current Market Trends

Low housing inventory is a big problem for many buyers in today’s market environment. There simply aren’t enough homes being built to meet demand, but flipping is a creative solution that brings desirable homes to the market without needing to invest in a new construction project. Increasing home prices are another pressing issue, and the need for reasonably priced homes is very high. That need can be met with renovated properties, which tend to cost less than newer homes.

Benefits of Fix and Flip Investing

There are many benefits to investing in a fix and flip project, including some important financial ones. First, they provide a quick return on investment, with most projects being completed in less than 6 months. For home flips, investors can make use of specialized fix and flip loans which cover 100% of renovation costs along with helping cover the acquisition of the property.

Real estate investments offer certain tax advantages. For example, your returns can be reinvested with a 1031 exchange allowing you to acquire new property while also deferring taxes on your returns. Be sure to work with an accountant or other tax professional to understand what your options are and maximize your savings.

Fix and flip projects are also great because they offer more flexibility and control than longer-term investments. Your plan and vision for the investment are unique, and you can choose how directly involved you want to be in the project. You can even save on repairs by completing some of the work yourself. Market timing and the seasonal nature of real estate investing will also play a role in your return, so you should dedicate time to research before diving into an investment.

Mitigating Risks

Fix and flip investing also comes with its fair share of risk to consider, particularly in the due diligence stage. Location is always an important factor for real estate, so you should aim to find homes in desirable areas to ensure healthy demand. Be sure to get a professional home inspection for any property you are considering flipping. Certain issues, such as structural repair or flood damage, are very costly to fix and these properties are better off avoided.

You should work to build a team of real estate professionals that can assist you with your investment. This will include a real estate agent, a lender, a tax professional, and contractors. When selecting contractors for the work you can’t do, be sure you are working with licensed professionals. If possible, ask for examples of their past work so you can get an idea of what to expect.

Final Tips

One important thing not to overlook is how you plan to finance your investment. Understand that you have different loan options, and there are many financing partners you can choose to work with. Take the time to research each one to find the best fit for your project. The sign of a trusted lender will be a reliable track record of delivering investment financing, and the ability to offer additional resources to help investors achieve success.

RCN Capital

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 looking to finance a fix and flip project, RCN Capital has competitive loan options available.