As a third-party originator, your success is closely tied to the success of your clients—real estate investors. When they bring you a potential fix-and-flip property, your ability to guide them through financing and market value assessment can make all the difference in earning their trust and ensuring a profitable partnership. One of the key conversations you'll have is determining the market value of their fix and flip property. This process not only helps investors make sound decisions but also positions you as a valuable advisor in their journey.
Below, we’ll break down the key steps to help your clients evaluate the value of a potential fix-and-flip investment while addressing questions like “How do you determine the market value of a home” and “Is it worth it to flip a house.”
Before your clients jump into the business of home flipping, there are several ways to determine if a property is worth their hard-earned cash. The ideal fix and flip property should have:
Once you’ve found a good property that meets your client's standards, it’s now time to guide your client on a timeline for renovations and projected market value. How do you determine the market value of fix and flip? Continue reading to find out.
Many investors find it helpful to think about the costs of their fix and flip when determining the final projected value. There are many costs associated with flipping a property, including:
Help your clients understand the initial costs involved in purchasing a property. Aside from the actual value of the property, this could include:
Knowing total acquisition costs helps an investor correctly value their property on the market since buyers will be thinking about these conditions when finalizing their purchase. Offering clear guidance can set you apart as a trusted advisor.
For most fix-and-flip projects, rehab expenses are some of the largest upfront investments. Help your clients calculate costs such as:
Reinforce the importance of having a realistic rehab budget. Encourage clients to work with contractors who can provide detailed estimates, reducing the likelihood of budget overruns.
For clients using financing, it’s vital to consider loan holding costs. Break down the key components, such as:
The more informed your clients are about their holding costs, the better they’ll understand how these factors contribute to their overall profitability.
One of the most critical metrics in evaluating a fix-and-flip opportunity is the After Repair Value (ARV). This figure is essential in answering questions like “How much profit can I expect from the investment?”
Here’s how you can help your clients accurately calculate ARV:
Your clients achieve better success rates when you assist them in determining an accurate ARV.
The determination of market value in fix-and-flip properties heavily depends on data from comparable sales. Your clients will benefit more from your guidance if you show them how to search for properties that match their investment type.
Guide them in looking for:
Through your experience as a broker, you can access tools including MLS and local sales databases to deliver accurate comparable data to your clients. The process of helping clients analyze comps enhances their confidence level and establishes your reputation as an expert partner.
The financial solutions at RCN Capital are designed specifically for investors involved in real estate. As a broker, partnering with us enables you to offer your clients:
When you work with RCN Capital, you gain access to flexible options that align with the unique needs of your clients. This not only enhances your service offerings but also builds long-term relationships with your clients by helping them achieve their investment goals.
Connect with RCN Capital today. Through our partnership, you can assist real estate investors in achieving their fix-and-flip objectives while supporting your position as a trusted industry broker.