Every real estate investor has one goal in mind when purchasing a property to fix and flip, to make a profit. Even the most experienced investors find themselves working with tight margins, due in part to making some simple mistakes. Understanding the most common things shared by high return fix and flip properties in California gives investors an edge. Regardless of location, there are three common things shared by high return fix and flip properties in California.
Low Purchase Price
Perhaps one of the most important factors to consider when fixing and flipping properties is the initial purchase price. Ideally, the price paid will be low in comparison to the market value of comparable properties in the area. Most investors buy properties at auction, which generally means lower prices, however, buyers have to be careful not to get caught up in a bidding war. Experienced investors set a limit and stick to it, even if it means losing out on the deal, regardless of how much money they have available to them.
Even more important than the purchase price is the cost of repairing, updating and remodeling a home. Investors know that they have to minimize the amount they spend on the work, yet they also realize that without improvements, the property will never sell. Cosmetic fixes such as painting and replacing flooring are high return, low investment fixes. Replacing a roof, completely re-configuring a space, or adding on requires a large bankroll and plenty of time. Smart investors look for ways to reduce costs such as only doing minimal repairs and re-using or recycling materials for future projects.
One of the most difficult aspects of bringing a fix and flip property to market is time. Most investors have a limited amount of capital and must recoup their investments as quickly as possible so they can re-invest the money. Developing close working relationships with contractors, inspectors and real estate professionals is one way to speed up the process, and ensure deadlines are met. However, setting realistic deadlines also goes a long way toward reaching goals. Determining the appropriate time-frame isn't easy for newbies, it's something that an investor learns over time, mostly by trial and error.
Contact us if you would like more information about fix and flip properties, real estate investing or financing. We're a hard money lender with years of experience working with beginner and experienced investors alike. We will be more than happy to work with you to maximize your return on investment, so you can achieve your goals faster.