Fix and flip projects are growing in popularity among investors, providing them with excellent returns in a short-time period, or serving as a great launchpad into the world of real estate investing. In today’s competitive property market, it also offers a way to provide much needed homes to low inventory areas while netting a profit. Investors of all experience levels rely on their investment partners for guidance with these projects, and that’s especially true if they’re new to home flipping. This is where you, as a broker, can step in to provide the most value to these investors. At nearly every step of the process, you can provide key insights and advice to help move the project forward.
Read on as we cover the lifecycle of a fix and flip deal, and how brokers can step in to offer the most value to their clients along the way.
Every successful fix and flip deal starts with finding the right property. Ideally, investors will want undervalued or distressed properties located in high-demand neighborhoods. Essentially, those properties with the most upside potential, which aren’t always easy to find. As a broker, you can offer your expertise to help identify high-demand markets and utilize your professional network to find off-market properties perfect for flipping. Be sure to tap wholesalers, auctions, foreclosures, or connect directly with motivated sellers. The brokers who can offer services beyond just financing will find the most success, as your clients will return to you for continual advice on real estate investing.
Another area investors commonly struggle with is evaluating deals and estimating return potential. Accurately predicting a property’s After Repair Value (ARV) requires market expertise, which only professionals like you can provide. You can offer access to tools like deal calculators to help clients evaluate deals, and conduct market research on their behalf to confirm it. This service of deal evaluation can be a great way to establish relationships with clients since it enhances your authority as a real estate expert. It can also serve as a good entry point for discussing financing options and deal specifics like loan interest rates.
Speaking of financing, there are a number of deal funding options you can suggest to clients. While conventional mortgages are always viable, the timeline isn’t really suitable for a home flip, and banks may not always be willing to lend on distressed properties. As a broker, you should look to add a number of fix and flip solutions to your product offerings. For instance, private lenders offer programs designed specifically for flipping, with shorter loan terms and additional funding to cover renovations on top of acquisitions. They are also typically more flexible, with a streamlined approval process and interest-only loan options. Besides offering private loans, you can discuss alternative funding solutions with your clients, such as refinancing existing property or establishing investment partnerships.
The bulk of a fix and flip’s timeline will be taken up by the renovation phase. Investors need funding available rapidly, which you can help deliver as a financing partner. It will be your job to manage draw requests, ensure project timelines are met, and advise your client on how to keep progress moving forward. Aside from resolving financing issues, you can provide insights on project management and working with contractors, or connect them with vetted real estate professionals that can help move their project along.
In terms of financing, the partner you choose to work with can have a big impact on how smooth the renovation phase will go. Working with quality lenders that understand the importance of speed in funding these deals will help you provide better service to your clients.
Once the rehab phase is complete, investors will be looking to sell quickly to minimize holding costs and maximize ROI. However, not every investor knows the best practices for selling a property quickly. This is where you can offer additional value as an investment partner. Offer to conduct market research on your client’s behalf to help them set a fair sale price. Assist with their listing strategy by offering tips, and expand their marketing to new channels like real estate groups on social media. You can even utilize your personal network to refer them to professionals including real estate agents, staging companies, and tax professionals. The assistance you offer here will be key; investors remember partners who helped make their project a success in its final stages.
Brokers who offer services beyond a deal’s close are the ones who really stand out from the competition. Don’t just disappear after the sale, celebrate the win with your client, analyze results, and start the discussion about next steps. This also opens the door to talking about your client’s long-term goals, and where you might fit into that process.
You can also make use of technology to stay top of mind with previous clients. Utilize customer relationship management (CRM) tools to create an email list, and send over periodic emails on topics like the state of the market or deal opportunities. Having a social media presence is a must in today’s industry, and it can be a great way to stay better connected with your client base. Use it to create a community, posting educational content and client wins to further establish yourself as a real estate investing authority.
The best way to save on a real estate investment is to obtain financing from a lender that can provide you with 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 professionals. If you are looking to offer fix and flip financing to your clients, RCN Capital has competitive loan options and an award-winning broker referral program available to partners.