How to Evaluate Fix and Flip Properties
Investing in real estate is an exciting way to improve your financial situation and diversify your investment portfolio. Whether you’re just starting your real estate investment strategy or looking for a unique way to alter your current strategy, discover how you can earn more through fix and flip properties. Here are some easy steps to evaluate the potential of these hidden gems and discover how you can profit from repairing, restoring and reselling these properties.
First, spend some time considering the final product. Even with all your investments and vision for a better home or commercial building, will it be an in-demand property? It’s helpful to consider the potential of a fixer-upper property, but be sure you choose a property that has the potential to increase in value. Some properties are affordable because of a characteristic that is difficult or impossible to change. Property in an undesirable location, whether because of the neighborhood or close proximity to an airport, train station or industrial plant, is difficult to increase in value.
Next, look at comparable houses in your area. Realtors look at houses that sold with similar features and location to determine the price of a home. While the fix and flip property may have considerably less value because of necessary repairs or other features, try to picture what it will be like and where it will fit in the neighborhood. If you invest too much into a property and create a building that’s worth more than similar, surrounding ones, you’ll struggle to recover the investment cost.
Get to know contractors and realtors in your area if you wish to be successful in real estate. Someone with experience in the housing market understands the hidden value of properties, and a contractor will help you determine the feasibility of any repairs necessary to restore a damaged building. With a dedicated team and responsive financing, you can easily purchase and renovate a property that other investors may have overlooked.
Finally, consider the cost of remodeling your fixer-upper. Some properties are devalued because of cosmetic issues, such as interior paint and appliances, while others have significant structural issues and require professional repairs by a variety of contractors. Look for a qualified general contractor or subcontractors to provide rough estimates for your repairs. Fixing a property may sound easy, but unless you know the cost of these professional repairs it’s difficult to determine the potential profit of your fix and flip project.
