{"id":3604,"date":"2017-05-05T10:32:50","date_gmt":"2017-05-05T10:32:50","guid":{"rendered":"https:\/\/www.mashvisor.com\/blog\/?p=3604"},"modified":"2023-09-07T10:38:25","modified_gmt":"2023-09-07T10:38:25","slug":"fix-and-flip-ask-these-3-questions","status":"publish","type":"post","link":"https:\/\/www.mashvisor.com\/blog\/fix-and-flip-ask-these-3-questions\/","title":{"rendered":"Considering a Fix & Flip? Ask Yourself These 3 Questions First"},"content":{"rendered":"

So, you have the bug. You saw it on TV, attended a couple workshops, and did your homework; the only thing left is to find your fix and flip deal and get started! At Asset Based Lending, we see at least a dozen first-time real estate investors each month embark on their real estate journey \u2013 and do so profitably. However, before you jump in head-first, ask yourself these three questions.<\/p>\n

Do the numbers make sense?<\/h2>\n

There is no such thing as love when it comes to your investment property<\/a>. Successful investors remain emotionally detached from the project and approach every facet of the deal with an analytical mindset; either the numbers work, or they don\u2019t. The quickest way to doom a fix and flip is to fall in love and make an emotional decision, usually in the form of paying too much for the property.<\/p>\n

As a general rule of thumb, investors want to avoid spending more than 65%-70% of the After Repair Value on the deal. This includes both purchase and renovation costs. Any more than this, and there is a high likelihood that unforeseen expenses, holding costs, or a plethora of other things could eat away at your bottom line and reduce your profit margin. If you\u2019re not careful, you could end up investing a significant amount of money for a marginal return that just isn\u2019t worth the risk.<\/p>\n

How will I finance it?<\/h2>\n

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\u2019) capital, with a conventional mortgage, or with a hard money fix and flip loan<\/a>. 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 \u2013 a feature that is absolutely essential for most investors.<\/p>\n

Regardless of the route you take, be sure to line up and secure your funding prior to committing to the deal. Nobody likes having to scramble for cash last-minute and potentially having to decide between a last-resort financing option or losing the deal.<\/p>\n

Is the team ready?<\/h2>\n

Believe it or not, real estate investing is a team sport. The most successful flippers have built and refined a stable of trusted service providers that help them achieve their real estate goals. Your real estate investing team should include a good local realtor, general contractor, appraiser, accountant, attorney, and lender. Don\u2019t try to penny-pinch too much when it comes to your service providers; professionalism and quality work will save you time, money, and headaches in the long run!<\/p>\n

As a new investor, one of the easiest ways to build your investing team is to attend local Real Estate Investor Associations (REIAs) or meetups. These networking events are a great way to continue your education and connect with like-minded investors and service providers.<\/p>\n

This article has been contributed by our friends at Asset Based Lending<\/a>.<\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

So, you have the bug. You saw it on TV, attended a couple workshops, and did your<\/p>\n","protected":false},"author":79,"featured_media":3639,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[19829],"tags":[19966,19936,592,19935,19968],"class_list":["post-3604","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investor-blogs","tag-financing","tag-fix-and-flip","tag-guest-blogs","tag-return-on-investment","tag-short-term-strategy"],"yoast_head":"\nConsidering a Fix and Flip? Ask Yourself These 3 Questions First<\/title>\n<meta name=\"description\" content=\"Considering a fix and flip as a real estate investment? 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