Tips for Fix and Flips
Flipping investment properties is a great way to grow personal wealth through real estate, as a source of additional income or as a full time business. It is essential for you to learn how to flip the property as expediently as possible. Having a property that doesn’t sell quickly eats away at profits and ultimately results in a loss on the investment. In this post we’ll explore three tips investors can use to flip their properties faster and increase their profits.
1) Choose the right property
Choosing the right property is a crucial first step towards having a successful flip, you should look for properties that fit your comfort and experience level as well as your budget. If a property needs more than just cosmetic changes and doesn’t fit these requirements , then it is better to wait for the right property instead of choosing a property for the sole purpose of doing a flip.
Another key factor when choosing a fix-and-flip property is location. A property in the right location will have a higher after-repair-value and will be an appealing home for buyers, selling quickly once it’s on the market. A few things to look for in terms of a location are areas that are up and coming (i.e. properties in the area continue to appreciate at a high rate), have great schools, and have low crime rates.
2) Build a reliable team
An issue that arises and eats into investor profits is having an unreliable team. Nothing slows down a project more than having to fire multiple contractors who are either unresponsive or doing sub par work. To avoid this costly and time-consuming headache, vet multiple contractors before hiring one to work on the project.
To find the right contractor, take multiple bids from contractors for the rehab needed on the property and look for the right balance between price and quality of work. One contractor may do great work but at a higher price than the budget allows and another may bid a cheaper scope of work but the quality of the work may not be up to your standard.
Once you have narrowed your list to the final two or three candidates, request references from previous clients who can attest to the quality of the work as well as their experience working with the contractor. After receiving the references, you’ll be able to choose the contractor that will complete the rehab in an efficient and quality manner.
3) Correctly Estimate Budget and After-Repair-Value
Finally, you can flip the property faster by correctly estimating the rehab budget and the after-repair-value (ARV). A good rule of thumb is to over-budget on the rehab to cover any fixes that may arise throughout he project that are not initially a part of the list of upgrades. These can include new electrical wiring or replacing plumbing fixtures on the home.
Another important estimate to make is correctly estimating the after-repair-value. The after-repair-value is what the home will be worth once the rehab is completed and is ready to be sold. An accurate way to estimate the ARV is to find sales comparisons for homes in the neighborhood and what they were sold for in the past.
The bottom line of what makes a flip successful is profit. The faster you are able to fix-and-flip a property, the higher the profit will be. By utilizing these three tips you can not only flip any property faster but also be able to increase profits and grow your fix-and-flip business.