There’s no hiding the fact that the real estate market is as hot as it can be right now. While the prospect of beginning an investment career in the fix and flip market is especially enticing right now, starting from zero is a challenging prospect.
There are numerous factors that can affect your success in the fix and flip market and it’s important to consider all of them when getting started. If you’re almost ready to take the dive into real estate investment, solidify your strategy with these beginner fix and flip tips.
- Know your market – This is perhaps the most important tip you could utilize. Understanding the market surrounding the property you’re considering flipping is critical to the success of your fix and flip pursuits. Investing in an area local to you is the best way to ensure success, as you will already know what to expect at the end of your project. However, understanding your market goes beyond living there. Resources like Zillow give you direct access to selling prices over time and estimated lot values in your project’s neighborhood.
- Have a team ready – Rebuilding an entire house requires a lot of work. Whether you plan to be hands-on or removed from the day-to-day aspects of the project, you will need a team of laborers, contractors, attorneys, insurance agents, and a lender to make sure your flip goes according to plan.
Beyond just hiring people to work on your project, build a relationship with them. The best thing you can do to stay profitable in the real estate market is to have friends in the industry – especially contractors.
- Design a business plan – This doesn’t need to be the type of plan that startups show to investors – it just needs enough to make your goals tangible. Set out to commit to deadlines, have a solid budget, and set your goals for this project and beyond.
Bonus Fix and Flip Tip
Have an exit strategy. Not every project is going to be a raving success, especially when you’re first learning the lay of the land in the real estate industry. Oftentimes homes that feel like auction-day steals can have unforeseen critical flaws and it’s okay to have to pull the plug on a project if the costs are mounting.
- Understand what you need to fix – Not every flaw in a home needs to be fixed before you list it. There are plenty of major renovations that will need to be done in order to sell the home you’ve renovated, but making sure that every wall is the perfect color is not one such project. Primary considerations for necessary projects should include:
- Updated HVAC Systems
- New Roofing
- Upgraded Plumbing
- New Kitchen Appliances
The fewer major investments a potential buyer will need to make in the near future, the better. Most buyers will be interested in repainting spaces to match their desired color schemes and are not primarily interested in crown moulding.
- Secure your financing – While traditional, bank-issued loans may be a more familiar financing option, private “hard money” financing is often the fastest, most economical, and least complicated option. Hard money loans are generally asset based lending (ABL) which means that instead of calculating loan possibilities based on tax returns and/or bank statements, the lender considers the value of the assets, such as real estate, owned by an applicant as financial collateral when designing a loan.
Got all your ducks in a row? Ready to take the first dive into a fix and flip market? Consider the experts at EMCAP Lending for all of your hard money lending needs. Our expert team brings decades of experience to the table and is eager to provide you both the insights to get your started and the funds to see your project through. For more information about how EMCAP Lending can help your fix and flip projects succeed, contact us today.