How to Make a Profit Off of Your Fix and Flip Project
The fix and flip business is a risky one, as even though there is potential for great profit, there is also potential for great loss. Too many inexperienced flippers enter the business without the slightest inclination of what it takes to flip a home and make a profit, which is why so many of them are one-time investors. If you don’t want to be just a one-time investor, and if you want to turn flipping into a career, there are a few things you need to understand about the fix and flip business, and what is required to make a profit. Here are just three of them:
Have Investors Lined Up
As mentioned above, restoring a fixer-upper requires a significant monetary investment. Not only do you need to have the funds to purchase the home, but you also need to have enough money to pay for supplies and labor. That’s where investors come in. Before you begin searching for homes for sale, get investors lined up. This may require a business proposal, a good credit score and several professional references, in addition to a number of other things. Once you have at least one investor willing to fund your endeavor, start shopping.
Know Where to Look
The type of homes that you’re looking for aren’t going to be listed on Zillow or realtor pages. Rather, they’re going to be listed on bank websites or in auction listings. Some may not even be listed at all. Drive around the backroads and look for “For Sale By Owner” signs. Scour the web for listings that are older than 60 days, as owners are more likely to accept a lower offer beyond the 60-day period. By digging a bit, you may be able to find a diamond in the rough.
Know What to Look For
Just because a house is listed for $20,000 doesn’t mean that it’s a steal. It could mean that the house is in such bad disrepair that it will require tens of thousands of dollars just to make it livable, and another hundreds of thousands to make it market-ready. Look for a home that is ugly and has some issues, but that can be market ready in under a month and for less than $50,000.
The fix and flip business is a risky one, but it can be extremely rewarding. You can help make it more rewarding than risky by having investors lined up, knowing where to look for homes and knowing which homes are worth purchasing and which aren’t.