When fixing and flipping or fixing and leasing real estate properties there are some important aspects to take into consideration before moving forward with the project. The fix and flip corner in real estate investing can be highly profitable for investors, but it’s important to choose your projects wisely so you do not overextend yourself and your resources.
Before you purchase your next property, keep in mind these five important aspects:
- Location – The location is not only important to consider for your potential ROI, but it’s also important to consider how accessible the property is for you and your team. You don’t want to choose a property that would be a nuisance to travel to on a daily basis. It could cause delays in the project and unforeseeable travel expenses. It’s also important to consider the surrounding neighborhood and comparable houses. The house could be the perfect flip, but in a neighborhood that is not desirable to homebuyers, it could turn into a flopped project.
- Return on Investment – Having set guidelines for rehab projects helps investors choose a property to invest in. When selecting a property, consider the purchase price, renovation costs, taxes, fees, and interest payments compared to the after-repair-value of the home. Does this ROI meet your set guidelines? There are always risks involved when flipping and selling a home but, with these guidelines in mind, you shouldn’t make a purchase unless you feel the ROI will reflect properly.
- Determine a timeline – Before purchasing a property look at the scope of work needed and then determine if these fit into your timeline. Are you looking for a quick fix and sell, or do you have more time to spend on renovations before listing for resale? It’s also important to consider the season and weather when determining a timeline. Weather can affect how fast certain home improvements can be done, and bad weather can cause delays. Also, homes tend to sell faster during the warmer and sunnier months and slower during the cold and snow-filled months.
- Create a budget – Expenses can pile up when taking on a rehab project and it’s important to set a budget and stick with it. There can always be unforeseen expenses that occur but adding a section to the budget for unexpected expenses can help alleviate any stress if something arises. Also, keep in mind the market for the home. Do you need to spend more on high-end pieces or is the market looking for simple and practical?
- Get funding – Are you ready to buy? Let us help find the funding for your flip, by matching you with lenders in our Bridge Loan Network Marketplace.
Submit a free inquiry and the opportunity will be matched with our qualified and approved hard money lenders. The simple application portal digitalizes the lending process enabling brokers and borrowers to upload needed documents, authorize credit checks and have a full loan package for our lenders to review. Apply now!