When you start your own fix and flip business, you want to be sure that you're setting realistic goals. While you'd love to have several properties in line at once, the number you can manage will depend heavily on your ability to manage them--not to mention the contractors you partner with to get the houses cleaned up and ready to go. By implementing these five strategies, you can be sure that you'll end up with realistic goals, rather than overreaching yourself.
1. Keep your financial needs in mind. In the beginning.
You may only be able to work with a property or two at a time. As your capital increases, however, you'll be able to invest more in your business, leaving you with more properties to fix up at once. It's important, however, to make sure that your plans line up with your financial needs. If you're going to need a large deposit of ready cash soon--buying a car or sending a child to college, for example--you may need to scale back your investments accordingly.
2. Pay attention to the timeline.
How long is it actually going to take to get a house fixed up? You can't fix substantial damage overnight--and the more work a house needs, the longer it will take. To keep your goals realistic, make sure you're familiar with how long it will take to do the work your house needs.
3. Run the numbers.
Remember that while you're fixing up a house, you're going to be paying on the loan. Keep in mind that you'll continue to pay on the loan until the house sells, even if it sits on the market for a while. Make sure that your business will support those payments--and that you're prepared to continue making those payments even if the house remains on the market long-term.
4. Create contingency plans.
What if you can't sell a house as soon as you'd like? What happens if the market in the area tanks temporarily? Make sure that your business goals include contingency plans that will help you reach your long-term goals even if the short-term ones don't work out as you'd planned.
5. Partner closely with contractors.
If you won't be doing the work yourself, make sure you're partnering with contractors who will give honest estimates of both the timeline to complete the work and the cost. A close partnership will enable you to trust their estimates and create more realistic goals.
A fix and flip business is a great way to bring in additional income on the side--or even to have a great primary source of income. If you need funding for your fix and flip business, contact us today to learn how we can help.