A successful real estate investor is one who always does their homework and understands the inner workings of any specific investment deal they’re walking into. No matter how glamorous or easy the work may seem from a distance, you won’t see much of a result without sweat equity and a well-thought-out strategy. Here are some of the best tips to either kick off your first project or bolster an already robust fix-and-flip portfolio.
Like any other business, you’re going to need a plan. What timeline do you have in place and what budget are you working with? What is the scope of your project? Setting some basic ground rules for yourself not only ensures that you have a lay of the land, so to speak, but also that you stick to the plan with little to no deviation. Drawing out an appropriate timeline and budget also lets you survey what financing opportunities you may need to consider. When the time comes for you to sit with a potential lender, you’ll want to have all your ducks in a row. The more prepared you look and sound, the more likely your project will be financially supported.
If a property’s price is too good to be true, it just might be. Now, that’s not to say you should drive past a good deal, but it does mean you need to do your due diligence. You’ll want to evaluate the region and things like the job market in the area—does it have a booming local economy, or is there a high unemployment rate? What kinds of industries are thriving in the region? What growth trends are happening and what is the area’s age demographics? These are some of the questions worth answering and speaking with local real estate agents might prove to be a wonderful resource.
Be Realistic with Renovations
It might be tempting to go overboard and make the property the hottest one on the block, but it’s important to keep the project in perspective. While you want to turn a healthy profit from the flip, you don’t want to overprice the property out of the market. Focus on basic renovations and important rooms: backsplash in the kitchen; a new coat of paint on the walls and cabinets; updated fixtures in the bathrooms.
Huge renovations can not only become a money drain, but they can delay the flipping process, taking you longer to get the property back on the market and exit your investment. Leave extravagant items and unique taste additions to those who end up buying the property from you.
Start Building Your Fix and Flip Team
Your real estate venture is only as successful as the people you source to help with the process of flipping a home. Referencing back to the “networking” point above, successfully fixing and flipping a property requires a strong team. Depending on the scope of your project, some people that will need to be factored in can include some of the following:
• Real estate agents
• Private money lenders
Always Consider the “ROI”
ROI is a measurement of how much money is made on an investment in comparison with the initial upfront cost. Investors use the ROI to determine whether or not an investment is worth their time and effort. Investors can calculate how much money is expected to be made, and the profit they can expect to collect from the transaction.
When you make a big investment, especially in real estate, you should be properly prepared. According to Zippia, 8.5% of prospective real estate investors take further studies in finance or related fields in order to build a skill set best suited for real estate investing. Graduate programs in accounting teach advanced skills that can help real estate investors balance their books, calculate equities, and compare investments. Anyone armed with these financial skills will easily understand the basics of investing and be able to maximize the profits of any investment.
Temple View’s fix & flip loans are industry-leading - offering competitive rates, flexible terms, and are designed to meet individual needs regardless of experience level. We also offer advanced rehab draws and no monthly payments with our fix & flip loans. Our loan programs are designed to meet the needs and wants of investors and we're committed to helping you reach your real estate investing goals and providing you with the capital to seize your next great project.
Creating wealth through real estate is a rewarding experience for anyone, but especially those who are breaking into the world of entrepreneurship. By going into a project with a clear plan in mind, you’re more likely to succeed, whether it’s your first flip or your tenth.
And when it comes time to find the right partner to finance your next project, trust Temple View to help. Contact us today.