Fix it and Flip it... What you need to know!
Posted by Client Care on Wednesday, March 12th, 2014 at 11:08pm.
Buying real estate for investment purposes has become one of the best ways to develop long term equity in today’s market and rebounding economy. However, most successful real estate investors will tell you that this road is not a foolproof get-rich-quick scheme, especially since the last economic decline. In fact, some investments, particularly that of fix and flips which have been popularized by so many HGTV or TLC shows, are known for its rough and tough and sometimes fierce industry. Having everything to do with timing, labor, expenses, initial cost and good planning, even the most promising fix and flip investments can be derailed by unforeseen issues. For this reason, it is imperative that you account for both sides of the coin when you consider becoming a fix and flipper.
Here is what you need to know about today’s popular yet sometime not so glamorous side of the fix and flip market.
The fix and flip market has become harder for private investors since the foreclosure market has all but dried up. This means that investors are paying more money for distressed homes then they were which in turn makes the profit margin smaller.
Many of the critical decisions regarding the home have to be made up front. Forecasting whether or not a home has enough potential for profit is all done before any offer is made. This means you are investing time, energy and money into a home before it is even yours.
The golden rule of real estate still applies, location is everything! Even if you find a home that is a steal of deal, if the location is jaded, it should be a deal breaker. The reason behind this investment strategy is timing. Every minute a home sits on the market after it has been fixed up will cut into profit.
Employing a high quality local inspector will be one of your best assets moving forward. Having someone, or better yet a team of thorough inspectors, who can probe a potential home for problems or hazards will help ensure planning and repairs go accordingly. With that being said, sometimes things like mold are not discovered until rehab or restoration begins, so have a backup plan and additional funds if needed.
A licensed Realtor, who specializes in investment properties, as well as any investment broker, can really help you navigate your budding business in a competitive market. They have access to public records and comparables for the area, which will be able to give you additional and essential information, such as the average absorption rate for the neighborhood.
Honesty and legitimacy will go a long way in gaining your business and/or investment home community support. Furthermore, making sure all repairs are completed correctly and reaching out to the local community for labor and supplies will help generate positive word of mouth about your stellar newly refurbished home.
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