Structure your FixNFlip Investment for Success, Even in Uncertainty
Lima One Capital offers a wide variety of fix-and-flip investment property loans for real estate investors who are looking to purchase, rehab, and sell a property. Whether you need a bridge loan, a cash-out refinance, or a loan for heavy rehab or new construction, Lima One offers proven loan programs that give investors the ability to profit.
Of course, profit is not guaranteed, as the overall uncertainty that all financial and capital markets experienced in March 2020 has shown us. So a savvy fix-and-flip investor must be prepared in order to capitalize on the real estate opportunities that exist in the market.
So how do FixNFlip investors need to adapt in a time of uncertainty? Here are four tips.
Create a realistic renovation timeline
No matter what you’ve seen on HGTV, fix and flip projects take time. You need to account for the time it might take and budget and schedule accordingly. Too often, first-time flippers have very unrealistic timelines on how long it will take to get a house ready to flip. Even seasoned flippers can’t chart out a timeline that works every time because of factors from weather to labor shortages to unforeseen requirements like social distancing during the COVID-19 pandemic. While it’s fine to create an ideal timeline, your budgeting and planning process needs to account for contingencies. If your entire profit opportunity is based on a tight timeline, then you’re risking a complete failure of a flip. Don’t make that mistake.
Record every expense
Invoices, receipts and everything else you can think of spending money on needs to be organized and stored both for tax purposes and to give you a clear-eyed view of the actual cost of your project.. Taking a few minutes every day to store receipts and log expenses will save you headaches down the road, and help your future projects be even more successful.
Know your turf
You may love the fix and flip you just purchased, but will your potential buyer? Home shoppers aren’t just looking for a home that meets their needs. Families are looking for a neighborhood with access to great schools. Retirees are looking for more serenity. A young single may want night life. Before you invest in a property, know what the surrounding area looks and feels like. Get a feel for what it will look like in 10 years. Know what kind of people are moving into the neighborhood, and make sure your project fits their desires and budgets. This takes more than a desktop appraisal view of an area—especially in times when home prices are volatile. Focus your investments on areas you know, and you’ll give yourself the best chance of success.
Budget high, aim results low
This is simple. If you a purchase a house for $200,000, and want to make money off it, be realistic about the costs. You may want to do this on specific line items—Lima One’s in-house construction management team will help you do this. But it’s more important to do it for the whole project. If you think the sales price of your completed flip will be $250,000, make sure the numbers work with an ARV of $225K. If you make more money, great, but if you have overruns or need to sell quickly for some reason, you’ll have some flexibility.
At Lima One Capital, we have a passion for real estate and providing the best financing solutions for real estate investors across the country as they pursue their real estate investing goals and improve neighborhoods where they invest. Our online application process is simple and easy to complete. You’ll be guided through the process step-by-step, and document tracking is a breeze. So take the first step toward your next FixNFlip by contacting us or applying today.