A fix and the flip project could be extremely beneficial. You could profit substantially when you fix a property, as it would enhance its value once the project is completed and ready to be sold. Many real estate investors have lost millions of dollars in this business due to making wrong decisions when putting together plans for their fix and flip projects.
The best way to ensure the success of your project is to look over the mistakes made in the past by people in the industry so you could learn from them and not repeat them…Here are a few things you may want to avoid —
1. Avoid taking on projects that you cannot afford
Start by reviewing the expenses necessary for the project at hand. Look at what you’d have to spend based on the resources and manpower needed. The total expenses should be within your budget, as you should not get started on a project that you cannot afford which could result in abandoning the project before completion.
2. Estimating cost and time
You should always overestimate the cost of labor and material as well as the amount of time it will take to get the project done. Many projects end up taking longer than expected or costing more than estimated, so you must plan for potential delays or future repairs that weren’t spotted initially and factored into the plan, as this may cause a major loss for investors.
3. Minimizing expenses
You shouldn’t go after the most expensive products when shopping around for materials for your fix and flip project. The goal is not to buy the cheapest product; however, it is better to take your time finding competitive deals that fit your budget. The key is to make a once-unlivable property functional once again.
4. Finding contractors
You must screen every contractor you wish to hire. Get more than one estimate for each project and compare their quality of work as well as prices. Most importantly the contractors that you are looking to hire must be RELIABLE when it comes to TIMELINES. A contractor should complete their tasks as planned so there are no delays. Always remember for fix and flip projects, time is very critical!
5. Avoid working on properties that have too issues
A house that has lots of problems is often called a money pit. These properties may take months or even years to fix. The goal of every fix and flip project is to increase cashflow, which means by holding on to the property for a while, you may end up paying additional costs such as late fees with your lender or property taxes. Other than the fact that the value of your property may change over the years, which could be a bit risky. That is why sometimes it is better to avoid such properties.
Real Estate Funding Solutions is one of the top recognized mortgage lenders nationwide. We help our clients throughout the US with all their Real Estate Financial needs – Commercials, Residentials, Fix & Flip, Refinances, and New Constructions. If you have any questions regarding our products and services, please contact one of our nationwide mortgage specialists via email or phone