HGTV’s “Flip or Flop” condenses the highs and lows of fix-and-flipping into 30-minute episodes. The truth is, buying an investment property, renovating it, and then selling it for a higher price is much more complicated than what you see on the small screen. Generally, the more time you spend fixing a home, the more cash you spend and the less profit you make. Here’s why timing is everything when flipping a property.
Know Your Project Needs
Every fix and flip is different. Some homes need more repairs than others, while some properties will never generate an investment. That’s why you need to know the needs of the project before you sign on the dotted line. Tour the property and then tour it again. Check whether a home just needs a few improvements or a full renovation that costs thousands of dollars — each of these scenarios will require a specific plan.
Carry out due diligence on your fix-and-flip project, just like you would do with any other real estate investment. Time might be short — the average time to buy a property, flip it and sell it again is just six months — but that doesn’t mean you shouldn’t put your detective’s hat on and inspect the home thoroughly. Like HGTV’s show, proper due diligence determines whether a home is a flip or a flop.
You might want to bring in a contractor to assess the state of a property — factor this into your budget — and examine whether a house needs light or heavy renovations. Foundation and roof restorations tend to be the most expensive repairs; replacing water heaters and installing new pipes will also set you back. Look out for any potential problems that the naked eye might not see when touring a property, such as mold. Whether the required repairs are light or heavy, establish an expected completion timeline for all repairs.
Understand the Importance of Time
There’s one golden rule for fix-and-flips: The longer you hold on to a property, the lower return on your investment. You want to flip a home and resell it before the market changes and that can happen in any location. So stick to your expected completion timeline as much as you can.
Because time is of the essence, the most successful fix-and-flippers research property markets and assemble a team of experts — real estate agents, attorneys, lenders, plumbers, electricians, etc. — before purchasing one of these homes. It’s always a bad idea to buy a property blind and then waste two or three weeks trying to find the people you need to make an investment successful.
Partner With a Reputable Lender for Your Project
Most investors, even the incredibly successful ones, need quick access to financing to grow their portfolios. So, establish a long-term relationship with a lender that provides you with the fast funds you require to reach your investment goals.
Lendmarq enables wealth creation for investors like you with fast, reliable, and transparent loan programs that can finance your next fix and flip. The company offers financing up to 90 percent of the cost of your project and 100 percent of renovation costs, and you only pay interest on drawn funds.
Simplify Your Next Fix and Flip
Time is money in real estate, especially when flipping a home. Knowing your project needs, understanding the importance of time, and working closely with a lender that provides quick access to finance can make the fixing and flipping process a lot easier and increase your chances of investment success.
Do you want to finance a fix-and-flip project? Contact Lendmarq now!