Five Crucial Fix and Flip Tips

House flipping can be a very lucrative business if it’s done correctly. It’s important to know the big do’s and don’ts of flipping before diving in. Everyone learns from mistakes and gets wiser as they go, but there are basic rules you should know going in, in order to have any success. Below, you’ll find a few crucial tips to help you start out strong and smart.

Know Your Budget

Before doing anything else, you should make a budget and figure out the maximim amount you are willing to spend. A good rule of thumb is to figure out the After Repair Value (ARV) of the property, which is the price the property will sell for after it’s been renovated. Take that ARV price and multiply it by 70%, and then subtract the costs of renovations. That is your maximum budget for buying a property. Don’t dream too big when factoring in your ARV price, and don’t be naive about the renovation costs. Play it safe with your budget because you never know what unexpected complications might arise.

Don’t Go Too Big Too Fast

A common mistake new flippers make is letting their dreams get bigger than their budget. They see a beautiful house that will surely sell well after renovations, and they start planning big instead of thinking practically. While it can be fun to imagine the creating the perfect home, that’s extremely dangerous when trying to stick to a set budget. Going too big too fast is a mistake that is far too common and extremely hard to recover from. So, if you find a beautiful house, but it’s outside of your budget, you’ll have to do the hard thing and walk away. You should always try to come in under budget if possible when buying a house, but you should never go over your budget. Knowing your limits is important. There will be other opportunities and you don’t need to start your new business with such an overwhelming project. There are almost always unplanned complications on a fix and flip project that you can’t foresee, and if you’ve bitten off more than you can chew, you could find yourself unable to complete the project or in a significant amount of debt. Shop smart even when it’s hard.

Hire the Right Crew

Your construction crew can also make or break a project. They can make your life easier or heap huge amounts of stress and problems on you. Ideally, you want a professional crew that knows how to do a job quickly and correctly. You don’t want a crew that cuts corners, and you don’t need a crew that moves at the pace of molasses. Timing is everything with a fix and flip. The longer you hold on to a house, the less profit you generate. Do your research and hire a crew that you’re completely confident in.

Make the Right Improvements

It’s important to remember that you’re not trying to turn your fix and flip into a dream house. You don’t need to make unnecessary upgrades that wind up breaking the bank. On the flip side, you don’t want to skip over vital upgrades that are necessary to ensure your home sells. Do your research and pay attention to the selling points of the homes in the area of your fix and flip. Know your audience. That’s a vital part of the process that many newcomers overlook. Different people care about different parts of the house, and it’s crucial that you always remember that you’re renovating for them not yourself. So know your audience, and keep them in mind with every renovation decision that you make.

Choose the Right Lender

You’ve heard the term “It costs money to make money.” It’s been quoted time and time again and for good reason. You will require a substantial amount of money to purchase your fix and flip property and make the necessary renovations. Choosing the right lender is crucial to your success. It’s best to use a lender who works well with flippers and can provide funds for your loan in a timely manner with a low-interest rate.

The fixing and flipping process isn’t what it looks like on tv, but it can still be a lot of fun and very profitable if it’s done right. Newcomers who do their research, create reasonable budgets and hire the right crew and lending company set themselves up for success and make the process a much smoother one.

At Center Street Lending, we want to see you succeed and strive to provide you with the best possible loan for your upcoming project. To start your fix and flip adventure, please contact ustoday. We look forward to working with you soon.