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Most people have probably watched one of those popular TV shows where real estate experts take a derelict property, turn it into a beautiful home before selling it on for a massive profit. Although flipping a property might not be as smooth sailing as those shows indicate, they can indeed give you an excellent return on investment.
Flipping a property is an exciting venture that can be incredibly lucrative if you know what you’re doing.
Here are 5 top tips to help investors earn a profit from a fix and flip property.
Do Your Research
First time investors need to do their due diligence and research the market and the property thoroughly before making a purchase. Get familiar with various locations and figure out how much properties are selling for in specific areas. Once a potential property crops up on the market, make sure you investigate it properly and determine the risks. Factors you should consider is whether it is structurally sound and the amount of work it needs before you can get it to a saleable condition.
New investors may have big dreams about making bank from an old, run-down property. Seeing low-cost properties for sale might be tempting for first time buyers, but there is often more than meets the eye with these types of investments. The trick to a good fix and flip investment is to choose a low-cost property that doesn’t need extensive repair work. A fixer-upper needs to be able to turn a profit at the end of the day, and if the cost of renovation, repairs and restoration is too high, you may end up losing out. Properties that require a lot of work can cost a lot of time and money at the end of the day.
Choose the Right Lender
As you can probably guess, fix and flip properties require a substantial amount of capital. From acquisition to renovation and restoration, new investors will need to have access to enough money to flip a home. Not to mention, below market value homes are snapped up quickly, and investors need to be on the ball if they want to get the best deals. Sachem Lending provides various private lenders real estate solutions for different types of investments. They can approve loans quickly to help you fund your fix and flip property.
Expect the Unexpected
No matter how much research you do, there is always the chance of unexpected delays and surprise costs. From bad wiring and mold to vermin infestations and problems with contractors, there are a whole host of unpredictable issues that could set you back. When creating your initial plan, make sure you budget for these unforeseen instances.
Master the Processes
Flipping a home can get complicated, which is why you need the right processes and tools in place to streamline the proceedings. Investors should create a detailed renovation project plan and stay on top of contractor scheduling, payments and invoices. Mastering these processes can help reduce stress and boost productivity.