While fix and flip investment seems simple enough when you are watching an infomercial about it, flipping properties requires skill and hard work. Unlike the magical transformations that houses undergo on TV, real rehab work for propeties involves much more than time-lapse photography. Successful real estate flips are defined by some common characteristics. They are:
1) A Knack for Finding the Right Property
Consistently successful fix and flip investors work hard to find properties that meet their specifications. Before investing, it is wise to consider your overall strategy. Determine what you hope to achieve in terms of profitability as well as the amount of time you are willing to spend in pursuit of your goals. Having a set list of prerequisites for your property search will enable you to resist an impulsive purchase and maintain objectivity. Due diligence in the market research phase will help you achieve optimal results. Enthusiasm is great, but accurate information is better. A combination of the two, added with a dash of gifted intuition, will serve you well.
2) Ability to Assemble a Winning Team
Successful fix and flip investors are rarely lone rangers. For best results, it is wise to cultivate a good working relationship with those whose knowledge fills in gaps in your own. For instance, a solid relationship built with a realtor or appraiser will provide you with a wealth of knowledge of current market trends in your property's area. Similarly, working with a skilled contractor can teach you much about appropriate pricing for rehab projects. Building a professional relationship with a hard money lender will help you arrange fast financing when you find the ideal flipping opportunity.
3) An Eye for Design
Fix and flip investing is largely about seeing the potential of a property where others may not. Having realistic expectations regarding the amount of time and money necessary for a rehab project is highly important. However, having a bit of a creative streak can greatly increase your ability to make a profit on each flip. Sometimes something that appears on the surface to be counter-intuitive may just be the thing that sells a property more quickly. For instance, while conventional wisdom says that more bedrooms equal more sales potential, you might find that, in some cases, the number of bedrooms is less important than their respective sizes. Another example of this might be knowing that the cost of renovating a home to be accessible to the disabled buyer will likely pay for itself in a retirement community. Knowing the market and envisioning clearly your potential buyers is an essential characteristic of successful flipping.
4) A Realistic Timeline Projection
Clearly understanding the effect of time on market conditions and financing options will help you achieve your goals. Being realistic about the time needed to complete any needed repairs and factoring in the time it will take to show and sell the property is necessary. If you are planning to do much of the work alone, it is wise to avoid overestimating the time you can give to the project. Flipping properties should be an enjoyable journey, not a nail-biting, tension-filled race to the finish line.
5) An Attainable Price Tag
Another characteristic of a success fix and flip real estate investor is the ability to appropriately price the property after it is renovated. Setting too low a price will generate a sale, but will not help you reach your financial goals. On the other hand, over-pricing the property will lead to additional expense, as you will likely have to hold on to the property for a buyer for whom money is no object. For each property, there is a sweet spot-a price which will draw qualified buyers in while eliminating the casual house browsers with no intent to purchase. Time and patience is necessary to understand market conditions and use them to your best advantage.
When It All Comes Together
Investing in real estate is a time-proven method of increasing your financial health if done correctly. For optimal results, it is wise to know your market, choose your investment team, put thought and effort into design decisions, and price your property appropriately to sell. If you would like more information about fix and flip investing, please contact us. With years of experience helping real estate investors succeed with fast, professional lending solutions, we will be glad to work with you to ensure your success as a fix and flip investor today.
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