5 Tips to Managing Several Fix and Flip Projects At Once
Most investors who are new to the housing market, particularly residential homes, and the fix and flip industry get hung up on the process of rehabilitating properties due to failure to streamline the management process.
If you’re an investor, you need to plan wisely so as to avoid seeing timelines and costs spiral out of control. Investors are scrambling for the best deals because the house flipping industry has become very profitable in the recent past.
Although some analysts make the process of house flipping seems like an easy rehab process, it requires a lot of planning, putting together the right team, and analyzing the financials accurately.
A house flipper needs to research extensively when looking for the right house, put together credible contractors, choose sufficient financing options, and find a willing buyer. Here are five tips on how to successfully manage several fix and flip projects at once:
1. Analyze the market
As an investor, you have the duty of analyzing the local real estate market of Colorado, California, Arizona, and the neighboring regions. Familiarize yourself with the local schools, demographics, neighborhoods, and selling prices for various types of residential homes.
It’s easy to get this information from real estate sites and from local realtors who provide a lot of data about selling prices and learn about the type of residential homes that attract most willing buyers in the local markets. These details will help you in knowing the difference between the types of house that flip readily and those that sit in the real estate market for long.
2. Build a reliable team
You need to put together a reliable team of contractors, realtors, accountants, and real estate attorneys. The easiest way to build a team of skilled professionals is through networking and using referrals from credible sources.
Associate yourself with investment clubs and search for networking groups in Colorado, California, and Arizona. You should also talk to various realtors and mingle with as many buying and selling agents as possible. In fact, realtors can be a very good source of leads on properties.
3. Invest in houses that flip readily
You should only identify and invest in houses that flip readily in your neighborhood. For instance, if five-bedroom houses are popular in the area of your choice, they are likely to give you the best flipping odds when you rehab such residential homes. It’s important to note that while others neighborhoods attract empty nesters, others attract growing families.
A family with kids may prefer a larger house with about five rooms while an older couple will settle for a ranch-style home with two rooms. You can find credible leads from trustee sales, close friends, family members, HUD repos, and banks.
You can pay for purchases using cash or cashier’s check at a foreclosure auction and get good residential homes for flipping. Some trustees can allow bidders to inspect houses in such auctions and thus making it a good source of properties.
However, in other auctions, you may not be allowed to inspect the homes before the purchase. Some other auctions can be complex, especially when winning bidders have to deal with hidden liens against home titles or with the evicting squatters.
4. Structure the deal
Take out enough time to determine the value of similar residential homes in your neighborhood that have sold within the last few months and compare prices. Once you have established the price of the property, calculate the properties After Repair Price (ARV).
The ARV is very critical because it will help you know whether the rehab will be a profitable investment and some lenders use it to approximate the maximum loan amount you can qualify for to fund the project. An experienced general contractor can come in handy at this stage in helping you put together a budget repair sheet that contains all the home repairs and their equivalent costs.
You should use the estimated cost of all repairs and the purchase price of the home in calculating the ARV. Most experienced residential home flippers recommend taking on a rehab project when its ARV is less than 70% of the upgraded residential homes’ estimated selling price.
The next step is writing a purchase contract. If you don’t a have a real estate attorney to help you with the write up of the purchase contract, you can obtain a template from your realtor or local real estate investment club.
5. Manage the fix and flip process
Working with a general contractor is the easiest way of keeping the rehab renovations on track without wasting funds. The budget agreed upon during the inspection stage will provide you with a blueprint of all the tasks that need to be executed.
The budget repair sheet will also guide the general contractor in giving you estimates and helping you in tracking the progress.
Depending on the condition of the home and the scope of the project, it can take you around one to four months to completely renovate the house.
You should agree with your general contractor on the timeline for the completion of each fix and flip project separately before you start executing the project. If the timelines are not followed, costs can escalate quickly. The repair budget should also cater for other unexpected repairs such as the replacement of faulty windows and wiring.
You should at least set aside about 15% of the repair budget for such unexpected repairs. Successful house flipping requires extensive analysis, proper planning ahead, and teamwork.
Call Orchard Funding Today
Let us help you navigate the complexities of a fix and flip home by providing the necessary capital to secure a smooth flipping process. When investing in this business, it is important to have a professional lender on your side.
If you’re thinking about buying a home that you plan to renovate, Orchard Funding can give you a fix and flip loan. Our underwriting process is easy, and we can approve you in 24 hours or less. The application process is straightforward and some cases no appraisal is required.
If you’re thinking about getting a fix and flip loan, contact us online or call (310) 356 – 7373.