If you’ve done your first deal or two, you’ve probably noticed how much goes into a successful flip. You have to know the local market, know who your buyer is, have contractors you trust, and be able to get money together fast enough to win the property.
Fix-and-flip investing means buying a house at a low price, getting it ready to live in, and putting it back on the market for a profit. It can work very well, and it’s also easy to get wrong the first few times. These three tips will help.
1. Don’t buy without doing the research
A good deal looks different in every market, so the first job is to learn yours. Before you make an offer, find out:
- Do people want to buy in this neighborhood right now?
- What have similar homes sold for recently, and how quickly?
- What condition is the house really in?
Walk through the property yourself, ideally with a contractor. Photos hide a lot, and the repairs you didn’t spot are the ones that hurt your budget.
2. Keep your own taste out of it
It’s tempting to pick finishes you’d want in your own home. But you aren’t the one buying this house. Go into every decision thinking like the buyer. What do they need? What will they pay extra for?
The same thinking applies to the purchase. A low-priced house in an area nobody wants to move to isn’t a bargain. It will take longer to sell and may never reach the price you were counting on.
3. Buy low enough to leave room for profit
The most common mistake new investors make is paying too much for the house and then spending heavily to fix it. By the time it sells, there’s nothing left.
Two rules help here. First, only buy when the price leaves a comfortable margin after repairs, financing and selling costs. Second, don’t over-renovate. Buyers will change things to suit themselves anyway, so fix what matters most and hold some of your budget back for surprises. For a framework on the numbers, see the rules to follow when flipping a house.
Financing your flip
Sachem Lending works with investors who buy property at a discount, improve it and sell it. Our fix and flip loans are structured around your timeline and exit plan, and our in-house team handles everything from underwriting to draw requests. When you have a property in mind, fill out an application and we’ll take a look.
