5 Tips for Getting Started in Fix-and-Flip
While the latest buzz in the real estate industry is fixed and flip investment strategies, it can be difficult to know where to begin. You can invest wisely in the industry, but there are a few key tips you should understand before you purchase a home and start calling contractors. Here are five key tips on successfully flipping a home.
Find a Hard Money Financing Solution
Probably the biggest reason no one has flipped your chosen property already is the risk. Flipping comes with financial risk, as you never know exactly what is wrong with a house or how you’ll fix it. Because of this, banks aren’t willing to lend out a mortgage for all the financing required to fix a home. You’ll need to secure a hard money loan to get the cash necessary for renovations.
Pick Your Contractors Wisely
A great contractor is another key resource that will make your project go smoothly. Choose a local contractor who is experienced with remodeling and understands all the relevant issues that may arise. Depending on your area, most contractors may be in high demand, so it’s a good idea to have a few backup professionals on call. It’s tempting to work with the cheapest contractor out there, but balance cost with other critical factors, like experience and timely completion of projects.
Research Your Market
How are houses doing in your area? If the market is in a slump, it may be a good idea to hold off on your renovations. Similarly, if your area is up and coming, purchase your property quickly to catch the upward trend.
Select an Experienced Realtor
If you’re struggling to conduct market research, an experienced realtor is well worth the investment. Realtors have a lot of experience pricing houses in a particular area, so a local realtor can typically assess a renovation project as well. Discuss your plans for the property, and your realtor should be able to give you a rough estimate of the potential worth of your property once it’s completed.
Create Reasonable Goals
Finally, flipping houses isn’t a way to get rich quickly. While individuals have found the jackpot and made huge profits flipping homes, most sales are a more modest amount of money. This doesn’t mean that it isn’t a good investment strategy, but you’ll need to carefully pick the right fix and flip property, contractors and financing options in order to receive a large return on your investment.
