You can make a nice profit by rehabbing a property and selling it, but to get started, you need working capital. Fortunately, fix and flip loans can provide the necessary flexible funding.
However, if you want to ensure your investment pays off, you need to proceed thoughtfully and carefully. In fact, here are seven tips to ensure you’re making smart decisions.
1. Be Patient
The prospect of making a quick buck may be exciting, but patience is the key to success. For example, don’t jump on the first property you look at — make sure the house you’re buying meets your criteria and can be easily sold later. You may also want to wait to invest if the market isn’t in your favor.
2. Research the Neighborhood
When looking for a property, you need to expand your research to the neighborhood as well. This informs your renovation decisions, as the home should fall in line with the surrounding real estate. You also want to know what other houses in the neighborhood are going for.
3. Create a Budget
Before you even start looking at property, create a budget. Allocate funds for property purchasing, materials, labor and other fees such as permits and inspections. Once you have your budget, stick to it.
4. Schedule an Inspection
You may want to jump on a promising property right away, but it’s best to get an inspection first. Otherwise, you may end up with more repairs than you expected, which can eat into your profits if you go over-budget.
5. Work With a Realtor
While hiring a realtor is an additional expense, the benefits are worth it. Realtors have networks of real estate and construction professionals; these networks are invaluable when you’re trying to invest in property.
6. Understand Your Limits
There’s nothing wrong with getting your hands dirty and doing some of the renovations yourself. However, you need to know your limits. For example, if you’re not a trained electrician, you should hire a professional to do the home’s wiring.
7. Find the Right Contractor
Finally, find a contractor you can trust. If you plan to fix and flip multiple houses, you’ll want a reliable professional who quotes you accurate costs and fulfills promises. If you build a relationship with contractors, you can also ask them to look at properties with you to determine if a rehab is worth the effort.
Fix and flip real estate investment is a big commitment, but you can set yourself up for success. With these tips and sound judgement, you can make a great profit.