Fix & Flip
So you’ve been watching HGTV, attended an investor workshop or read a great article online and now you are interested in flipping houses. It looks very easy on television, but what HGTV doesn’t tell you is that it is very capital-intensive and is a lot of hard work. It is fast paced environment and very high risk, but with the right education, it can be very profitable. At NXT Level properties, we pride ourselves on giving our clients tools to be successful in investing.
Here are some tips in house flipping for Beginners:
1. Explore Your Financial Options
When it comes to financing, you have a variety of options. You can fund your deals one of three ways:
● with your own (or your partners’) capital
● with a conventional mortgage, or
● with a hard money fix and flip loan
Each method has advantages and disadvantages, so do your homework! For example, a conventional 203K loan typically only requires the investor to bring less than 5% of the purchase price to the table. On the other hand, a hard money loan comes with a higher interest rate but can close in a tenth of the time that it takes for a conventional mortgage – a feature that is absolutely essential for most investors.
2. Make Sense of The Numbers
The rule of thumb is that you want to avoid spending more than 65%^-70% after the repair value (APV). When it comes to money, you have options. Most real estate investors fund their deals one of three ways: with their own (or their partners’) capital, with a conventional mortgage, or with a hard money fix and flip loan. Each method has advantages and disadvantages, so do your homework! For example, a conventional 203K loan typically only requires the investor to bring less than 5% of the purchase price to the table. On the other hand, a hard money loan comes with a higher interest rate, but can close in a tenth of the time that it takes for a conventional mortgage – a feature that is absolutely essential for most investors on the deal. If you are not careful, you could end up investing a significant amount of money for little return on your investment – sometimes it’s not worth the risk.
3. Start Building Your Team
Your team will help you find, fix and sell your property. The great thing about NXT Level Properties is that not only do we educate you, but we can provide ALL of those services for you.
4. Find a Good Flip
Finding a good home to flip can be a challenge. Our experts with 20+ years experience can be a helpful guide to find a home suitable for your geographical and financial needs. We have an inventory of pocket listings so you won’t have to deal with Denver’s ever-changing market.
5. You’ve Found The House. Now What?
Don’t just rely on contractors to handle and supervise all the repairs. Make sure you are involved and manage the process. This will give you some experience in working with contractors and you want to make sure your project stays on budget.
6. Work Fast
When flipping properties – time is the essence. It’s simple, the shorter time you hold on to the house, the better your profits will be. Once your home renovation is complete, our team of experts will price your home according to the market value so it will sell quickly.
Partner with the best!