Am I Ready for my First Flip?
The fix-and-flip market can be terrifying for anyone thinking about diving into a game that requires money and time, but it can pay off in big dividends if you are willing to put in the effort. As scary as it seems, it can be so exciting and rewarding to see your first fix and flip blossom into the home of someone else’s dreams. How do you know if you’re ready to take the leap into real estate investing? If you have the money saved up or you have a great lender who can help you out with the right loan, and you’ve done your homework, you’re ready! Below are some tips to help you decide if you’re ready to take the leap into the exciting world of house-flipping.
1. You understand the value of your property
A solid plan includes professional value estimates for the property’s unrepaired “as-is” value; its value after your improvements; plus costs for borrowing, renovations, permits and sales expenses (like transfer taxes and commissions). The cost to flip a house will be different from home to home. There are four main things to consider when deciphering the cost of your flip: Purchase Price, Closing Costs, Cost to Rehab (that’s labor and material) and the Cost of Cosmetic Repairs.
If this is your first flip, multiply your costs by 1.5 to cover unexpected construction delays and unknown property defects.
2. You know and understand the neighborhood in which you’ve purchased your house
When you really know a neighborhood and micro market, you can talk about the characteristics and preferences of buyers moving into the neighborhood, why sellers move elsewhere, proposed school redistricting, nearby employers moving in or out, crime statistics and amenities. Understanding the demographics of a neighborhood can put you ahead of the pack and help you to decide what key factors to include in your home.
3. You know your skills, or lack thereof
It’s always important to understand when to ask for help, this can affect your bottom line. Being honest about the renovations you can and can’t do is key to determining if it’s worth your time to purchase that property. If you need to add in experts, that’s going to add to your cost.
4. You have your team in place
Purchasing a home to fix and flip is a big decision. That’s when you need to organize your team. This includes everyone from Contractors, Real Estate Agents, Attorneys, zoning guide, mentors and of course, a Lender specializing in Fix N Flips. Contact us now if you think you’re ready to fix and flip your first, or maybe your next home.