Fixing and flipping houses is a fascinating business. By establishing this new venture, you may be able to substantially increase your income-not to mention you’ll also develop investments that will allow you to reach financial freedom. By following this fix and flip guide, you may be able to engage in more effective investments.
1. Understand the Local Market
Knowing your local real estate market’s trends can help you make projections on its current state and how it will change. The market will give great insights into what features are worth improving on your investment property.
You will also know the market forces impacting your property and how they affect your business. Consider attending real estate seminars and networking with other investors to access reliable projections on what will likely happen in the property market.
2. Understand the Fix and Flip Process
- Being a flipper is about more than finding cheap properties and selling them for a profit later. It’s also about doing the necessary repairs on the property, finding contractors to help you with these repairs, and managing those contractors.
- Some investors may hire general contractors to fix the property, but others decide to do all the work themselves. Consider finding a business partner who knows the best methods for performing DIY renovations. You may find ways to save money on renovation supplies and other costs that come with house flipping.
- Find someone to help you manage the business at its early stage. The best option would be to find an experienced real estate professional who can help manage and maintain the property until you can sell it for a profit.
3. Have a Business Plan and Budget
Before spending money on the property:
- Prepare a detailed business plan.
- Make sure your plan is realistic and possible to achieve.
- Don’t make assumptions about the cost of repairs and other expenses.
- Take several quotes from real estate agents about similar properties in your area and use them to benchmark for future estimates.
Additionally, it would help if you listed all costs, including maintenance, taxes, and insurance payments. Once you have everything on paper, compare your income and see if you can make monthly payments without jeopardizing your financial situation.
4. Get a Private Money Loan
Once you’ve identified your property, have a business plan, and know your budget, it’s time to get the financing needed to complete the project. A private money loan may be the perfect financing option for fix and flip properties. The fix and flip loans usually come with the fastest turnaround time, and the money you get is pooled from private investors (not Wall St. or large banks).
The decision to fix and flip a house can be an excellent opportunity for anyone looking to venture into real estate. Always understand that you may go up against other investors with more experience and capital as a beginner. However, it pays to heed the wisdom of experienced pros who may point you in the right direction when you need help. Finally, remember that there are benefits and risks in any investment. Always do your due diligence and take the time to learn from other investors who have been there before you. Don’t give up when you encounter problems in your first real estate deal; instead, learn from your mistakes and move on.
Disclaimer: The information provided is not investment, tax, financial or legal advice. Consult with a licensed professional.
Investor Loan Source, a private money lending company, provides high-quality investment property loans to private real estate investors at the lowest costs possible. Our process for providing real estate investors with private lending is unique. We place emphasis on the hard asset and value of the collateral (property) and less on the borrower. Our asset-based real estate investment loan model means we can provide more money lending to more investors than is available from standard bank loan models. At Investor Loan Source, providing real estate investors hard money loans is our business; it’s all we do. We offer several business real estate loan products designed to serve a variety of investors and property profiles, including private money lending for properties to sell on owner finance.