Don’t have enough startup capital, or excellent credit? You might think flipping a property is impossible without enough cash or a great credit history; think again! Continue reading while we debunk these 6 common fix and flip myths.
6 Common Fix and Flip Myths
You Need Money to Flip Houses
One of the most common fix and flip myths is the misconception that you need an abundant amount of cash to start flipping houses. Even though having funds can give you an advantage in the house flipping process, you do not need any capital to start your journey in real estate. Even for those with available excess funds, you don’t need to use your own money to fund projects. Using a hard money loan allows you to leverage other people’s money and still generate profits from your fix and flip property. Many investors find it far easier to use other people’s money than to put up their own cash for real estate projects.
You Need Excellent Credit
This one might be a shocker to some, but you don’t need excellent credit to flip a home. When using a hard money loan, your credit is less of a factor when applying. These loans have different standards than traditional loans, making them easier to qualify for. Even if you have little to no credit, a private lender can be leveraged for your fix and flip project and give you access to funding.
Real Estate Investing is High Risk
One may look at the real estate market and think that it’s a high-risk investment. After all, you may be cautious after the 2008 housing crisis where the market notoriously crashed. Yes, all markets go up and down but the real estate market is not as risky as you may think. As an investor, there are ways to mitigate risk in any market. Long-term real estate investments generally hold less risk and can maintain their value through appreciation. If you’re concerned about risk, create a balanced portfolio that can mitigate high-risk market conditions.
You Have to Be Good at Construction
A common fix and flip myth is that you have to be good at construction to flip a house. Although it can be helpful to have a background in construction, you don’t necessarily have to know how to fix a house to flip it. Having knowledge in construction will save you on costs in the long run, but you can easily hire a reputable contractor to help fix your house. As long as you have an established timeline with your contractor, your fix and flip project will be back ready to sell on the market in a timely fashion.
You Can Get Rich Quick
Don’t be fooled by everything you see online, many investors put a generous amount of time and research into their fix and flip projects. House flipping requires hard work, it’s not a “get rich quick” endeavor. Big money is made in real estate as you slowly increase your tolerance to risk and gain experience in your portfolio. The lessons you learn along the way all contribute to your success in the end. Don’t try to cut corners, you’ll only end up burning yourself out.
Fixing Up Real Estate Will Make It Sell Fast
A house that has been recently renovated will be deemed worthy to sell on the market according to the location of the property and demographics of that region. A property that is being renovated in a suburban location with plenty of amenities and employment opportunities nearby will sell faster than a property in a location with high crime and less amenities. Don’t forget to research important factors like location, demographics, and nearby amenities when deciding which property to flip.
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.