Investing into the real estate market can offer many opportunities for someone looking to expand their portfolio. Fix and flips are one of the most popular ways investors see quick profits in real estate. Is your fix and flip strategy foolproof? Here’s a few ways you can improve your fix and flip strategy.
Have Good Relationships with Contractors
When trying to find the right contractor for your fix and flip property, don’t go with the cheapest one you can find. Instead, you want to find a trusted, experienced contractor to complete the job. This is why it is valuable to have a network of trustable contractors before diving into a fix and flip property. If you are a new investor looking to find trusted connections, you can either ask around for referrals or ask the contractor directly for a portfolio of their previous work. Having thorough references will give you an idea of the needed timeline to complete the project and the overall quality of work by the contractor. You can find contractors by asking around for referrals, or using online resources like the Better Business Bureau.
Finding a deal is no easy task with real estate investing, especially in a market that has low supply. If you want to make sure you find the right deal, don’t settle for the first one that comes along. Ask around to find leads and don’t be afraid to negotiate when it comes to closing the deal. Settling for the first great deal that jumps out at you could leave you missing out on a better opportunity. Compare local data to see if the property is worthy of your investment.
Determine Your Opportunity Cost
Every investment you make has opportunity cost, or the cost of not being able to take your money and invest it into another project. If you want to improve your fix and flip strategy, then you need to calculate all the risks of purchasing your investment property and see how they compare with putting the same money into another, safer investment. Think about the after-repair value of the property you wish to invest in. Will repairing the property add substantial value? If not, then the property is probably not worth investing in. Make the most out of your money with the little time you have by determining the opportunity cost of every investment property.
Research the Market
Before jumping into any new investment, you must research the market you are putting your hard-earned capital into. Investors need to know their local real estate market before making a purchase. Researching your local market can give you a good idea of what your property can sell for once rehab is completed. Be aware of how long it takes for real estate to typically sell in your area of investment, as this can affect how long it takes to offload the property. Study the local real estate market as much as possible before pulling the trigger on a fix and flip property. If your area of investment is being built up with new commercial properties or improved school systems, then this data can also affect your decision. Fully researching the market you plan to invest in can give you a better understanding of what to expect in the future regarding profitability and risks.
Create a Timeline for Construction
If you’re looking to improve your fix and flip strategy, you should start by creating a construction timeline for the project you want to invest in. Having a timeline for your construction or renovation process will help your team to stay on track, allowing you to save money in construction costs. You can start making income faster on your fix and flip property when you have a timeline in place. Don’t let your team fall behind due to not sticking to a properly planned out timeline. If you want to maximize your returns and improve your fix and flip strategy then you should always have a timeline for your construction process.
Have Multiple Exit Strategies
When investing into the real estate market, you should have multiple exit strategies in place to help alleviate the stress of any uncertain market conditions you may encounter. Some exit strategies to consider include selling the property on the market, wholesaling the property to another investor, or holding the property and generating income from a rent-to-own tenant. No matter what strategy you choose, you should have multiple ones that are viable for your property because in times of uncertainty your initial idea may not go according to plan.
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.