1. Find the Perfect Project
For a successful fix and flip, you want to find the worst house in the best neighborhood! The more amenities your property has the better chance it will have selling against the competition. Things such as a yard, driveway, garage, good sized rooms, town sewer versus septic, being on a street with little car traffic, walking distance to town centers, etc.
2. Do Your Research on the Location
Location, Location, Location! Do a drive by of the entire neighborhood. Yes, you can improve your rehab property, but you cannot change your neighbors, and this could drive buyers away. For example, avoid high crime related areas. Look for cities/towns with good school systems and locations that have high quantities of homes being sold.
3. Bring a Contractor to Inspect the Home
If you are not a contractor, it is important that you find a loyal contractor to partner up with. Have them prepare a breakdown of repairs that need to be done to the house and what the cost of those repairs will be. Always ask a contractor for their license and insurance.
4. Create a Budget
Create and stick to a budget! Make sure to include a contingency expense in your budget for the unexpected. Most contingency budgets will save about 5%-10% of their budget just in case any extra expenses come up in the middle of the project. Overages on a budget may take away from the investors potential profit.
5. Know What Adds Value to the Home
Home improvements that add value to the home:
o Updating the Kitchen and Bathrooms
o Neutral Paint Colors
o Curb Appeal/ Exterior Improvements
o Open Concept
o New Fixtures
6. Know What Does NOT Add Value to the Home
Home improvements that do not add value to the home:
o Hot Tubs
o Swimming Pools
o Personal taste or style
o Solar panels
o Too much wallpaper
o Loud colors
7. Time Management
When fixing and flipping a home, “time is money!” Most of the time, flippers are borrowing money from hard money lenders so each day they are paying interest on their loan so it is important that you find a project that you can get done in a timely manner. For a successful flip, find a house that can be renovated quickly and listed back on the market as soon as possible!
8. Have an Exit Strategy
Make sure to have your real estate agent put together a market analysis of comparable properties that have sold in the last 6 months and are within a certain radius of the subject property. Then you and your realtor can determine a profitable selling price for the home after the renovations are completed.
9. Find the Right Price to List
One of the biggest mistakes you can make is listing the renovated property too high. If you list the property too high, then it is going to end up sitting on the market longer. If this happens, then you will have to start reducing your price and that will take away from your profit.
10. Find the Right Hard Money Lender
It is important to choose the right hard money lender that is going to help lead you to success. Choose a reliable company that will help guide you to make the best decisions on a project that is right for you. It is crucial that they are able to close fast and be able to respond to draw requests quickly.
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