When fixing and flipping or fixing and leasing real estate properties there are some important aspects to take into consideration before moving forward with the project. The fix and flip industry can be highly profitable for investors, but it is important to choose your projects wisely so you do not over extend yourself and your resources.
Before you purchase your next property, keep in mind these five important aspects:
- Location – The location is not only important to consider for your potential ROI, but it’s also important to consider how accessible the property is for you and your team. You don’t want to choose a property that would be a nuisance to travel to on a daily basis. It could cause delays in the project and unforeseeable travel expenses. It’s also important to consider the surrounding neighborhood and comparable houses. The house could be the perfect flip, but in a neighborhood that is not desirable to homebuyers it could turn into a flopped project.
- Return on Investment – Having set guidelines for rehab projects helps investors select the right property for their business. Considering the purchase price, renovation costs, taxes, fees and interest payments compared to the after-repair-value of the home, dose the ROI meet your guidelines? There are always risks involved when flipping and selling a home but, when keeping that in mind you shouldn’t make a purchase unless you feel the ROI will meet the guidelines you set.
- Determine a timeline – Before purchasing a property look at the size and scope of the renovations needed and then determine if these fit into your timeline. Are you looking for a quick return, or do you have more time to spend on renovations before listing for resale? It’s also important to consider the season and weather when determining a timeline. Homes tend to sell faster during the warmer and sunnier months and slower during the cold and snow filled months.
- Create a budget – Expenses can pile up when taking on a rehab project and it’s important to set a budget and stick with it. There can always been unforeseen expenses that occur, but adding a section to the budget for unexpected expenses can help alleviate any stress if something arises. Also keep in mind the market for the home. Do you need to spend more on high end pieces or is the market looking for simple and practical.
- Get funding – Are you ready to buy? Let us help provide the funding for your flip.
As the nation’s premier direct private lender, RCN Capital fills a void in the marketplace by offering short-term commercial loans to fund the purchase of non-owner occupied residential, mixed-use and commercial properties. We also provide rehab financing and bridge loans. By offering custom loan programs and streamlined underwriting, RCN gets you the funding you need, when you need it.