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Are you looking to add a fix and flip property to your real estate investment portfolio? Here’s our guide on how to flip a property in as little as 6 steps.
How to Fix and Flip a Property in 6 Steps
Research
Your first step before making any moves in the real estate market is to research and plan a successful strategy. A savvy investor knows how to recognize a good deal and estimate how much a property will sell for. In this case, the more research the better, since you don’t want to be underprepared for what lies ahead. Some factors to research include the community that you intend to invest into, the local requirements for permits and zoning, and how long the project will take. Think about the renovation process of a fix and flip property when conducting your research, as it’s wise to get an idea of renovation costs before starting an actual project.
Find a Property
Finding the right property is no easy task, but it’s important to not settle for the first property that fits your criteria. You can find a property by conducting individual research or hiring a real estate agent to assist you with the process. Either way, you should take time to examine the factors of every potential property and think about:
- the risks of the property
- the location
- it’s after-repair value
- the benefits of the property
Once you’ve found your ideal property, it’s now time to obtain financing to pay for your new investment.
Obtain Financing
If you lack the funds to purchase a property upfront, you can obtain financing to help fund your new purchase of property. That’s right, even with little to no money you can still invest in real estate. The ways to finance your property differ, varying between which lender you chose for your strategy. Types of financing include:
Traditional Loans
Like Fannie Mae and Freddie Mac, these traditional loans follow federal regulations and generally have longer-terms.
Private Money
Private money is obtained through a private lender, who will generally be more flexible than traditional sources of funding. Be aware, private lenders have room to negotiate higher interest rates since there are minimal regulations to adhere to.
Hard Money Loans
One of the most common ways to fund a fix and flip investment, hard money loans can be acquired by private institutions and hard money lenders. These loans generally have higher interest rates than traditional loans but carry a much shorter term.
Create a Timeline
The next step in successfully flipping a property is to create a timeline for your project that outlines all costs, and a roadmap of renovations. This definitive moment of your renovation project will influence your contractor’s availability and overall bid. In other words, this timeline defines what work actually gets done. As you’re defining your property renovations, be sure to think about these determining questions:
- Will it add value?
- Will it help sell?
- Is it cost effective?
- Is it needed?
Asking these questions can help to you define your timeline and stick to your budget.
Find the Right Contractor and Renovate
Finding the right contractor can make or break an investment. The importance of finding the right contractor and not settling for the lowest bidder is often overlooked by many investors. A good contractor is able to:
- Stick to deadlines
- Respect your budget
- Have good quality work
An ideal contractor should also be able to provide a portfolio of work, and you might find that good references are a help during this process.
Stage and Sell the Property
Once the renovation stage is complete, it’s now time to sell your property. When it’s time to put your house on the market, you can entice buyers by staging your home. Remember, high quality photos mean everything, and sometimes your smartphone will not capture the essence of your fix and flip investment. A good real estate agent can also be important during this step. Once you’ve found an offer that works for you, it’s time to close and repeat the process!
RCN Capital
RCN Capital offers short-term and long-term financing options for real estate investors. Whether you are looking to fix & flip properties or hold properties for rental income, RCN has flexible options that are suited to your needs. Connect with us today to discuss your next real estate investment.