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Whether you are new to the real estate market or want to expand your current list of properties, investing into a fix and flip property can deem profitable for one’s real estate portfolio. Here’s how to foolproof your fix and flip strategy.
Master Your Market
Before jumping into a fix and flip property, master the local market. Getting knowledge about the local market for your fix and flip is absolutely necessary when creating a strategy for your real estate investment. Some determining factors in the local real estate market include:
- Household Income
- Home Size
- Neighborhood
- Geographic Location
- Local Amenities
- Demand in Market
Create Reliable Relationships
Creating reliable relationships with your broker and contractors can improve your real estate investment by bringing trust and new opportunities to your strategy. Your real estate broker has many local connections and help your fix and flip by referring you to reliable professionals and contractors. When you have a reliable contractor you can depend on, you will avoid over extended work times that may arise and draw out your investment.
Leave Extra Room in Your Budget
If you want to foolproof your fix and flip, always leave extra room in your budget for unexpected costs that may arise. Imagine, just as you think your fix and flip is ready to go on the market, you discover another appliance needs to be replaced. Those emergency fixes can add up financially for an investor who is ready to sell, affecting your profit margin. Leaving extra room in your budget can prove useful for any last-minute expenses.
Get Your Property Inspected
If you want to play it safe with you investment, consider getting your property inspected to see what repairs need to be done. A property inspection can save you from finding out about major repairs down the line. Although getting an inspection is not necessary, it is suggested for investors who want to foolproof their fix and flip to avoid major repairs that will eat away at your profit margins.
Don’t Break the 70% Rule
The most important piece of information to determine to foolproof your fix and flip property is the after-repair value (ARV) of your property. If you’re looking for sufficient profit margin on a property, it is suggested to not purchase a home if the price exceeds more than 70% of the property’s after repair value. Factors that determine your property’s ARV include location, size, and nearby amenities. Talk to a real estate broker in your area to help determine your property’s after repair value.
Stay Organized and on Schedule
Along the road of fool proofing your fix and flip, you’re going to encounter numerous important documents and contracts. It can be hard to stay organized when unexpected events arise, so remember throughout the process of your investment to stay on track with regards to your timeline. Staying on schedule will make sure your investment goes as planned instead of getting backtracked, which is crucial because in the investment world time is money.
Have an Exit Strategy
In any type of investment, it is best to have an exit strategy that will allow you to offload the asset in case of market turbulence. Having an exit strategy allows you to execute your investment better. When fool proofing your fix and flip strategy, create an exit strategy that would allow you to take multiple directions with your investment. First, create a plan for your investment and think of risks. Then, think of multiple exit strategies that would allow you to mitigate those risks.
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 todayto discuss your next real estate investment.