You have heard the adage, “If you want a job done right, do it yourself.” And most likely that is exactly what you normally do. Most investors who specialize in fix and flip properties are very adept at using the right construction tools once work on a property begins in earnest. But are you using all the right tools to be truly successful at fix and flip work?
There is much more to profitable investment than simply doing the lion’s share of physical repairs to a fixer-upper yourself. Here are some valuable tools to help you choose the properties with the greatest potential and find the best source of financing to help you bring the project to its desired conclusion.
While choosing the right property to flip is part art, it is also part science. You may have a wonderful eye for spotting diamonds in the rough, but it is often the course of wisdom to have additional outside opinions as well. Networking with a realtor whom you respect is a good option. Maintaining a good working relationship with a knowledgeable realtor will give you access to information you might not otherwise acquire. A realtor with a finger on the pulse of a neighborhood is an invaluable source of information you will need to assess the practicality of your projections regarding ARV and a realistic timetable for flipping your property.
Likewise, a good relationship with a seasoned property inspector can be an important tool for your use. Property inspectors are trained to evaluate properties in a different way than realtors, and this different perspective gives you more to work with in making your own estimate of your project’s value.
Not to be overlooked is building a strong relationship with a contractor or carpenter who can help you with the project as it progresses. While you may originally try to tackle most of the repairs alone, sometimes an extra pair of hands or even an entire crew of willing workers can smooth the way for a project to be finished in a time-saving manner. Since time is money in the fix and flip world, having a carpenter or contractor as a trusted contact makes your life easier by eliminating the need for searching for skilled laborers in a pinch.
Another essential tool to a successful fix and flip venture is finding the right fix and flip loan. While some smaller investors use their own money, it is often a good idea for an investor looking to expand his opportunities to find a good lender with which to work. Finding such a lender involves some research. While traditional banks may offer loans based on your own creditworthiness, private money lenders (sometimes called hard money lenders) make asset-based loans on the value of the property you are planning to flip. Offering more attractive short-term rates and a much more agile lending platform than traditional banks, private money lenders specialize in getting you the money you need quickly. This is highly important, as time is a serious consideration when you make offers for a property. Giving you the freedom to make a quick offer and get a quick approval speeds the fix and flip process along.
Not every private money lender will be a good fit for your needs, however. It is prudent to research your lender well. Discuss terms and rates carefully to ensure that your lender’s goals align with your own. Find out the lender’s policies regarding flexibility of repayment options and the possibility of extending terms to coincide with market fluctuations. In this way, you can sell your property at the right time to maximize your profit.
With these human tools in place, your fix and flip projects will run more smoothly and your investment will have a higher rate of return. If you would like more information about how to maximize your chances of success with fix and flip financing, please contact us. We will be glad to be the most valuable tool in your collection.