If you’ve always wanted to enter the real estate business, you might have considered fixing and flipping houses. This venture is highly profitable and sustainable if you approach it correctly, but not everyone knows how to go about it properly. Below, you can read some of the best tips for beginnings in the fix and flip market.
Know What Goes Into the Fixing and Flipping Process
You can become a successful house fixer and flipper by learning what goes into the fixing and flipping process. It doesn’t only involve purchasing a house and attempting to sell it for a profit. You need to secure financing, develop an exit strategy, and contribute a lot of TLC to experience a successful flip.
Before you start looking for homes, you may benefit from learning a thing or two about home improvement. Having some basic knowledge of electrical and plumbing work, as well as other home components, can help you diagnose issues and recruit the right talent to make more complex repairs.
Build a Team of Advisors
Rarely do house flippers take on the task of fixing and flipping a home alone. Instead, they consult with and recruit the help of many advisors. Some advisors you may consider talking to before you pursue this venture include:
- Property managers.
- Real estate agents.
- Interior designers.
As someone new to the fix-and-flip market, you may feel tempted to take on the majority of the work yourself. However, you can benefit from at least speaking to these professionals to better understand the intricacies of the market. After your conversations with them, you may want to hire them for their services. For example, an accountant can help you track your home purchases and sales and complete your tax write-offs while ensuring you comply with federal and state regulations.
Learn About Your Local Real Estate Market
The process for selling homes is quite different between states. For example, there’s a vastly different process for selling homes in Alaska than there is in Florida. There are even differences within adjacent cities and communities, so it’s important to learn about your local real estate market. You can also educate yourself on the differences between adjacent markets if you plan to fix and flip homes in multiple locations. For example, one city may be growing and expanding, while another may be experiencing a massive emigration of homeowners.
You can also determine the attributes of a location that may make it a desirable place to live. For example, you may prefer to purchase a property that’s in an area with good transportation hubs and reputable school districts. You may also consider permit requirements if you want to buy a property that requires extensive construction work so you can remain on schedule.
Establish a Business Plan
When you first become a fixer and flipper, you’ll likely have a big-picture plan: to make money. While this goal is something everyone can get behind, it’s important to create a concrete business plan. Within your plan, outline your realistic return-on-investment goals and an analysis of the current market in which you want to sell. You can also define your desired funding sources, time frame, and budget.
Use all this information to better understand the risks involved and the resources you may need to produce a successful outcome. Detailed planning can distinguish a successful flipper from an unsuccessful one, so it’s important to get ahead in this department.
Be Willing To Take on Undesirable Homes
An outdated layout. Overgrown landscaping. A kitchen filled with pests. Home aspects like these may make most home buyers run for the hills in search of more appealing options. As a fixer and flipper, you can challenge yourself to see the potential in homes like these. While they may look irredeemable at first, you can evaluate your budget and consider what changes you can make.
Think about whether you have the resources to transform the home into something modern and beautiful that you would like to live in yourself. If you can easily answer yes, consider taking on a house that’s in rough shape.
Focus on Homes That Need Cosmetic Updates
While some beginner fixers and flippers may feel comfortable taking on more damaged houses because they have construction experience, you may not be as confident. If you’re completely new to the industry, you may focus on homes that only need cosmetic updates. Consider homes that need improvements like new countertops, new floors, and updated landscaping.
You may be able to complete these projects yourself or work with a contractor to get them done. You can also consider a cosmetic update as simple as painting. Painting is a budget-friendly investment upfront, and it can provide as much as a 107% return on investment. Some important areas to paint include the walls in the main living space and the kitchen cabinets. You may even consider painting the trim around the home to give the space some added flair and freshness.
Address Foundational or Structural Problems First
If you buy a home knowing that it has foundational or structural problems, be sure to address these first. Your house won’t sell if there are major problems present with its electricity supply, plumbing system, roof, or other major components. When you get these large-scale problems out of the way first, you can proceed to focus on the minor details that will help bring your house together.
Secure Your Financing
Once you know what house you want to buy, you can take steps to secure your financing. Consider getting a loan from a private lender like Titan Funding that offers fix-and-flip loans. A mortgage loan often has a longer turnaround time, which can be up to 30 days. When you get a fix-and-flip loan, you may access your funds in as little as seven days. This quick turnaround period is important for the fix-and-flip market, as you can take advantage of properties that might not be available for long.
Contact our team to secure funding and discuss your options, regardless of your current credit score or financial situation. At Titan Funding, we’re ready to help you start fixing and flipping homes today.
Image by Nolan Isaac is free to use under the Unsplash License