If you’re a regular reader, you know we have covered strategies for finding the right property, creating an accurate valuation and smart buying and selling. But so far we have not put it all together in a single checklist.
Today, we wanted to lay out the steps in a way that’s helpful to make sure all the bases are covered to make your next deal a success:
- Find the right property in the right location
- Create an accurate After Repair Value (ARV) estimate
- Use our free Scope of Work (SOW) template to estimate repairs
- Create a project calendar
- Obtain suitable financing
- Purchase your property
- Execute your plan and manage contingencies
- Complete required inspections and appraisals
- Market your property to qualified buyers
The biggest challenge we see for newer and veteran investors alike is creating accurate renovation cost estimates and timelines.
The ARV is the key
Many fix and flippers tend to underestimate initial costs. It may be a case of excitement over-optimism on the potential profits to be had. We have talked before about beginning with the end in mind, and that means being brutally honest about the ARV of your subject property.
Your best tool is a Comparable Market Analysis, based on comparable local for-sale and recently sold properties. If you don’t have a good CMA tool and the local knowledge to use it, make sure you have a real estate pro with local expertise on your team.
Many times you will have to adjust your comps to ensure you get an accurate ARV. If you’re not certain, get an opinion of ARV from your lender – assuming you have chosen one that offers support and advice as well as financing.
Of course, the key to making your numbers work is finding the right property in the first place. To make sure you’re ready to go, we invite you to apply with Navigator Private Capital and get a fast, informed decision.
Contingency costs
Commercial break: If your lending partner does not help you plan for – or help you recover from – project delays, contact Navigator Private Capital. We can help you stay on track.
Experienced investors know to plan for the unexpected, and to budget for some unplanned expenses. This will lower your estimated bottom-line profits, but it’s essential to make informed decisions, avoid deals that won’t work, when you know the true holding costs of your project.
Another question that’s best to ask at the outset: Can your lender help you avoid delays?
What happens when you’re in the middle of a project and you need a draw. We’ve heard stories about lenders who don’t return calls for days or required elaborate documentation, photos and faxes for a draw request. Then, the wait begins while your request sits in a processing queue.
At this point, time is not on your side. When you’re paying interest for 30-45 days longer than planned, your entire budget and timeline needs reworking.
When you need a draw, we don’t make you jump through hoops. Call us, we’ll come out in a day or two – not weeks – to inspect your property and evaluate your request. Contact us today at 888.444.3160 or info@gonavcap.com to learn more.
Our clients consider us as partners, not just a money source. We think you will, too.