You’ve heard the old adage—buy low, sell high.
This is sound advice in almost any industry but it holds especially true when it comes to house flipping. It’s hard to be successful if you’re paying too much for your investment property right up front.
So how can you be sure that your next project will turn a profit? With over 40 combined years of real estate experience behind us here at Navigator Private Capital, we offer a few suggestions:
- Consider the home’s location, location, location. Make sure that the house you are considering buying is in a neighborhood where people would like to live. Just because a house in inexpensive doesn’t mean it’s a good deal. Are the homes around it appreciating in value? That’s a positive sign that demand in that area is strong.
- Do some number crunching. To put together a profitable plan, first figure out the ARV or after repair value of the home after the work is done. This is where consulting a realtor or broker pays off since they can run a CMA (Comparative Market Analysis) to help estimate the sales price. Once you know how how much the home is likely to sell for, you can subtract the costs of the renovation and financing to estimate your overall profit.
- Hire a good contractor. Unless you are particularly handy, finding a building professional familiar with managing sub-contractors and trades makes a lot of sense. After all, time is money. It’s important that your project stay on budget and on schedule. The faster your project is completed, the sooner you can realize your profit and move on to the next project.
- Set up your financing upfront. Flipping houses can be an expensive proposition. A traditional lender will require money up front and offer an income-based mortgage. Although the rate may be low, qualifying may be tricky, and many flippers can’t afford to tie up their capital in deposits. Hard money lenders offer asset based loans with no money down but often exorbitant rates. As a private lender, Navigator Private Capital offers real estate investors a better choice. With competitive rates and 100% financing, we offer a streamlined process and local support. More than just a funding source, we are committed to your success.
- Commit to a schedule. House flipping can be a complicated process with many moving parts. It helps to set up a timeline and stick to it. Keeping your project moving forward is a priority for us at Navigator. To speed things along, we have automated much of the loan application process and offer draws when you need them, often within a day or two.
- Price your project to sell. Often this means pricing your property slightly under market so that you enjoy a quick sale. Holding out for top dollar isn’t wise, especially if you have financed the renovation. We’ve said it before and we’ll say it again. Time is money.
We would love to talk with you about your next renovation project. Reach out to us at 443.603.0193 or via email at:
Tim Boord: tim@gonavcap.com
Rick Rall: rick@gonavcap.com