Investing in commercial real estate or residential properties can be a great way to achieve a strong financial return on to help provide for your future. One type of investment property many are beginning to consider investing in is a fix and flip property. When purchasing a fix and flip property, the intent would be to purchase a property that needs repairs or enhancements and then make the repairs with the hope of increasing its value. Sounds simple, right? The reality is not all fix and flip properties are made equal. Here are a few things you should look for:
Location, location, location!
Similar to any other type of real estate, a property that is going to be fixed and re-sold needs to be in a great location. When you are looking for a property, you should look for a home that is located near public transportation, is in a good school district, has plenty of local amenities, or has other features that will continue to draw new homebuyers to the area. This will help to ensure that there will be a pool of potential buyers once you’re done with the repairs.
Make sure the property you are considering is in good overall physical condition. Ideally, you should look for a home that only needs cosmetic upgrades. These types of improvements are generally less expensive and provide a strong return on investment. On the other hand, if you buy a home that has major structural, plumbing, or roofing issues, you could end up spending thousands of dollars making repairs that will have no impact on the home value. The best way to ensure the home quality is to pay for a detailed home inspection prior to your purchase.
Another factor to consider when you are buying a home to flip is the size of the home. While it is possible to make a profit flipping a small home, the greatest profit margins are available with bigger houses. While it is possible to add square footage, this often requires time-consuming zoning processes and can be very expensive to complete.
Whether you’re new to flipping or just honing your skills to turn a better profit on future flips, learning to develop a vision for your flips always will pay in the long run. Contact Center Street Lending for further advice and to learn how to get reasonable financing for purchasing and rehabbing your upcoming projects.