Known for their high profit margins and fast turnover times, many investors prefer to buy distressed properties and renovate them for sale. However, most fix and flip projects do not reflect the story that house flipping shows tell. Are you ready to jump into the real estate market? Here’s 5 tips to follow when buying your first fix and flip property.
Tips for Buying Your First Fix and Flip
Choose the Right Location
When buying your first fix and flip, it’s important to purchase a property that fits the specific criteria regarding your ideal location. Whenever you’re making a real estate investment, you should always research the real estate market thoroughly to find the best location to invest into. Locations that are high in demand year-round are generally wise locations to purchase real estate. Once you’ve found your ideal property, it would be wise to bring in a general contractor to help assess the property so you can estimate how much work the property needs.
Finance Your Project
Before you go browsing potential properties, think about the ways you’re going to finance your new project. If you don’t have enough cash on hand, you should get a preapproved loan to help finance your fix and flip. To do this, you’ll need to find a lender that fits your requirements. Some lenders require applicants to have good credit scores, while others are more flexible with this issue. It’s common for lenders to require some sort of down payment, for example, with cash or another type of collateral.
Find the Right Contractor
Finding the right contractor is often an overlooked factor of buying your first fix and flip. During the winter, professionals often take side work with fixer uppers to supplement their income. Always remember not to settle with the first available contractor, take the time to research your available options and find the best one for your project. You’ll want your contractor to do high-quality work and stick to the timeline of your fix and flip. If you’re willing to put in the sweat and tears yourself, doing repairs single-handedly can help reduce your costs while boosting your ARV.
Research Your Property
To have a successful fix and flip, you must pick the right property, in the right location, at the right price. Even if you find the best deal on the market, it’s wise to know which renovations to make and which ones to skip before your property becomes a money pit. It’s important to know the applicable tax and zoning laws of a location to avoid unnecessary expenses. Remember to always research your property and it’s demographics before investing, and don’t be afraid to cut your losses.
When you’re buying your first fix and flip property, you should always remember to have patience; sometimes the best investments take time to develop. Instead of jumping on the first property you see listed, wait until you find the right property that fits your budget and expectations. Novices often rush out and buy the first house they see, professionals take their time and wait for the right property. As a real estate professional, you should understand that it takes time to buy and sell a house and that profit margins are sometimes slim.
Don’t Go Overboard
It’s a common mistake for investors to go overboard with their renovations instead of knowing which improvements to make with their first fix and flip. When planning your improvements, remember to keep your target audience in mind and make the necessary repairs to your property before incorporating any design trends. It’s wise to not go overboard with elaborate details or unnecessary updates, as these will only add excessive costs to your budget.
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.