Starting a real estate fix and flip business has several exciting advantages. This includes both the exceptional opportunity to feel good about reviving a property, and the enormous financial gain from a successful fix and flip deal. Want to start investing in fix and flips properties? Here is an all-inclusive guide on buying and selling them.
The Complete Guide to Fix and Flips
Study and comprehend the characteristics of the real estate market in which you intend to invest. You must be aware of its market forces and trends. Using the findings from your research, you can forecast the future state of the given market. Read up on numerous reports on regional real estate trends to accomplish this. This analysis will also assist you in determining which features of your investment property are worth repairing and selling.
Set a Budget
The hardest issue in real estate renovation is staying under budget. Your financial obligations to the property must be made clear. List all costs, including those for upkeep, taxes, and insurance. Once you’ve compiled all of your expenses, compare them to your income to see whether you can afford the monthly payments without endangering your financial condition.
Before you even consider making a purchase, you’ll need to secure the money needed to flip the house. If at all possible, pay for the property in cash. By doing so, you will avoid incurring debt and paying interest on the home before selling it. Don’t be concerned if you can’t pay cash for a home though; there are other options available to you. If you don’t have enough money to purchase a home, consider pooling your resources with friends and family or using a crowdfunding website to raise funds with fellow investors.
There are additional ways for financing your fix and flip if those seem too hazardous. Here are some potential examples:
- Cash-out Refinance
A cash-out refinance may be an option if the value of your primary residence has increased. With a cash-out refinance, you can restructure the amount you owe while removing equity from your current mortgage.
- Hard Money Loan
A hard money loan is a brief loan that is financed by private lending institutions. These loans will still need down payments, have terms of six months to a year, and have higher interest rates than conventional loans.
Find a Fix and Flip Property
Finding fix and flip properties can be a challenging task, but with some research and a bit of persistence, you can find a great property that has the potential to generate a significant profit. One of the best ways to find a fix and flip property is by working with a real estate agent who has experience in this area. These agents often have access to properties that are not listed on the market or they can help you identify potential deals before they are widely advertised.
Another way to find a fix and flip property is by scouring online real estate listings. Websites like Zillow, Trulia, and Realtor.com offer a wealth of information about properties that are currently on the market, including their asking price, location, and features. You can also check auction sites like Auction.com, which often feature distressed properties that can be purchased at a discount.
Plan the Updates and Changes
The next step is to create a scope of work, which will serve as the framework and roadmap for your rehabilitation. Your plan will specify the work for which your contractors will submit bids and reach an agreement, as well as what is actually completed. When you finish the scope of work and decide what to fix, ask yourself these four crucial questions:
- Will it add value?
- Will it help sell?
- Is it cost effective?
- Is it needed?
If your renovation does not meet these criteria, you may be better of skipping it as it will not be a cost-effective use of your resources.
During the renovation period, you have the option of being involved or hands-off. The appearance and layout of the investment property should be planned with the assistance of a designer, but the actual contracting work should be left to the professionals. The contractor should be allowed to complete their work, but you should monitor their progress because each day that passes means you are effectively losing money in holding costs with your property.
Stage the Home
After the contractor has completed the work and the renovations are finished, the next step is to put the house on the market — but in order to entice buyers, the home must be staged. It is critical to have it cleaned and properly photographed for the listing. Remember that smartphone photos cannot compete with high-quality, professional images.
Selling Your Property
Selling fix and flip properties can be a rewarding and profitable experience; however, careful planning and execution are required to maximize your return on investment. To begin, you should have a firm grasp on the local real estate market as well as the types of buyers who are most likely to be interested in your property. To get the most out of your sale, consider working with a real estate agent. This will help you determine an appropriate listing price and marketing strategy. To avoid delays or legal issues during the sale process, make sure you have all necessary paperwork and permits. Finally, it’s time to negotiate with the buyer and finalize the transaction. With these strategies in place, you can successfully sell your fix and flip property and reap the rewards of your hard work and investment.
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.