Whether you’ve caught the bug to invest in property after seeing THE success others had on a TV show, or you’re just ready to start creating new revenue streams with your investments, it’s important to understand some of the fundamentals involved in the ‘fix and flip’ movement and how you can best capitalize on them for your upcoming endeavor.
Sure, buying a house at an incredible price and making it valuable enough to sell at a higher rate can be beneficial to your wallet, but if you’ve never done this sort of thing, you have more work cut out for you than you anticipate.
If you find yourself asking if it really is as easy as they make it look on TV, the answer is: Not quite. However, there are certainly some lucrative benefits to a ‘fix and flip’ if you’re willing to put in the work.
Here are our top 3 tips for quickly getting through a fix and flip transaction.
You cannot truly know what you’re getting into and how much room for profit you have without first conducting an audit of the property and the potential you have to turn a profit after fixing it up. For this reason, After Repair Value (ARV) is a critical calculation to do early on in the process. This formula should also account for all financing, closing costs and other fees to maintain the property as you work on it. The end goal is to sell the house not only for more than what you paid for it but also at a surplus of what you had to invest to fix it.
Know Your Target Buyers
When you understand the type of buyers that may choose to purchase the home you can plan around their wants and desires when fixing up and listing the home. While savvy shoppers and DIY-ers may not realize the benefit in buying a home that’s finished and ready to move into because they’d rather save some money and do the work themselves, there is still a large portion of potential buyers out there who would much rather have instant gratification and move right into their newly purchased home. If you can fix the house so that it’s move-in ready and speaks directly to the desires of specific buyers, you’re much more likely to sell it quickly.
Assemble the Right Team
No great work can be done alone. There is strength in teamwork and when you aspire to do something as bold as purchase a property and quickly flip it for a profit, you’re going to need support. You need a reliable contractor, a great investment partner and someone who understands the market to bring your vision through to the final sale. Working together with these key parts of the whole is the difference between sitting on an investment for long periods of time and losing money, or actually finding buyers so it can all come together and leave you with the best ROI outcome.
Looking for a Fix & Flip loan? Sachem Lending offers innovative financing solutions that meet the unique needs of individual borrower requests. Apply for a loan today!