Costly Mistakes to Avoid When Investing in Fix and Flips in Colorado
At some time or another, a real estate investor can fall a prey to common and costly mistakes. The fix and flip business is an area in which you will find a considerable amount of chances for such mistakes. When it comes to investing in a fix and flip business (and with any other real estate investing), knowing what to do and doing what you know is the key aspect. Besides, it is also important to know what you shouldn’t do if you expect sustainable progress and write your success story in the business of fixing and flipping real estate.
Mistake 01: Having Unrealistic Expectations
The old saying is right: you shouldn’t be counting your chickens before they are hatched. There are considerable numbers of house flippers who spend too much money, whether capital or a hard money loan, and time on repairs with the expectation of being compensated by all that money from the selling price of the property. This is a very risky approach; you should always try to save money in all the possible ways without overspending. This doesn’t mean, however, that you should settle for cheaper, low-quality materials; look for shops that sell materials for lower prices without skimping on quality. You can expect discounts on bulk purchases. Try to initiate a partnership with a building materials supplier on a long-term basis. It is also important to invest in fixing what will add value to the home. Make sure that the areas of the home that you are rehabbing will provide you with the commensurate value return on the sales price. In an existing home, there are any numbers of improvements that one can choose to make, but not all of them are considered equal in the way of a return on investment. There are many other ways for you to implement cost-effective strategies other than spending money hand over fist!
Mistake 02: Not Researching Enough
Some novice fix and flippers tend to focus on cheap fixers without paying much interest to the other facts. Just because you find a property for a very cheap price, that doesn’t mean that you can expect a huge profit margin when selling it back; you should do proper research about the area. The average property prices of the neighborhood, the willingness of the people to purchase properties from the respective neighborhood, and the ability to match the average selling price once the repairing costs are added are some of the major concerns you must be aware of. Check out our other blogs to make sure you are evaluating all of your holding costs on a property correctly. Be conservative in your estimates so that you can have a positive end result.
Mistake 03: Avoiding ‘Creativity’ Factor
Impressions do mean a lot when it comes to the real estate field. No matter how valuable the property you are going to sell, without a good impression, you can’t expect your buyers to like it and agree to pay the price you list. With simple yet creative tweaks, you can give a whole new appearance to the property and increase the value significantly. However, being creative is not spending large amounts of money; it is something you can do by making the most of what you already have. In fact, the profitability of the flip and fix business depends on the way you utilize available resources. Make sure you also use the right real estate agent to sell your property — you want them to be an expert in the neighborhood and prefer them to have buyers already waiting for a property to be delivered in that area. It is shocking to see what home staging can do for buyers. There is a reason that national home builders have model homes. Treat your home like a model to drive traffic to your real estate investment.
You don’t always have to spend a ton to increase the value of a property. It is all about being creative and thinking outside of the box.
Your hard money loan can also impact your real estate investment. Contact Colorado’s hard money lenders at TABS, LLC. to learn more and get started on your next fix and flip.