Flipping property, one of the most lucrative strategies of Real Estate Investment, has become more competitive than ever today. At the same time, it also provides investors with a record return on their investments. All Real Estate Investors are well aware of the fact that investment done in fix and flip is one the best way to start the journey of real estate investment.
In generic terms, Fix & Flip is the strategy of buying a distressed property, renovating it, or fixing it and then selling it out for profit. The property might be distressed due to multiple reasons such as abandonment or the owner failing to pay for it. The main objective of flipping a house is to buy it at a lower price and sell it at a much higher rate. The investor needs to invest his hard work to reduce the costs and earn a profit in a relatively short period.
One can certainly make good money in Fix & Flip properties if they are ready to put in the work. You must do a smart work and be practical to take major decisions involved in it.
Certain factors should be kept in mind before you plan your fix and flip investment.
- THE 70% RULE IN FLIPPING HOUSE
According to the 70% rule, an investor should not pay more than 70% of a property’s ARV. Now, what is ARV? ARV stands for After Repair value which is the value of the property after the renovation or improvement. It applies the total cost of the flip that includes, the acquiring of the property, cost of all the repairs plus any extra cost inferred that should not be more than 70% of the total estimated ARV. This rule gives all the investors a greater probability of earning a higher return.
- ANALYZE THE MARKET
Being well aware of the market will assist you in choosing the most desirable home that will yield you a greater profit margin. It is very crucial to have a brief idea of how long the property must be held before flipping. The recent sales, trending market rates, and average days will provide you with an upper hand advantage and will help you in squashing your competition.
- KEEP YOURSELF READY FOR THE COSTS INVOLVED
Sometimes if the situation gets unfavorable and the investor needs to do any extra repairing work or the property has to be left for some more time then, the 70% rule still helps in ensuring them the profit on the overall transaction. In some cases, if the profit margin diminishes then too it does not let them in the loss.
- GO FOR TRUSTED CONTRACTORS
To handle repairs & renovations, you need to hire reputable people to do the necessary work . It is advisable to check licenses and references work for contractors you want to hire. Make sure their quotes are in line with your set budget and they can meet your desired expectations and timelines.
- THE RIGHT TIME TO SELL
The most important thing that the investors or flippers should keep in mind is not to overprice their property to have more profit. After fixing the house, waste no time in fixing the real price according to the market and keep in touch with your real estate agents to sell the property as quickly as you can.
- FINDING THE BEST FINANCERS
If you are passionate about real estate investment you need to choose the best financial partner for it. For Fixing & Flipping, you need a full plan to finance a project. We at 5F ASSOCIATES are always ready to take care of your financial needs. We provide loans for Fix & Flip in the most convenient way and with the least documentation procedure. We specialize in all types of loans such as Fix & Flip, short and long-term financing, non-owner-occupied loans, rehabs, short-term rentals, and also in real estate wholesaling. We consider you as our valued clients and our whole team work only to satisfy your financial needs. We believe in closing the deal at the right time without any hassle.
Allow us to be your financial partner for a lifetime
. Call us anytime for any questions and loan-related requirements.
Visit our website for more information.
www.5fassociates.com