One of the most difficult parts of being a fix-and-flip investor is managing your budget during the rehab process. This is hard enough to do for personal projects – imagine what it’s like for a major rehab! Things always turn out far more expensive than intended, and there are bumps along the way that end up tapping into the budget. Luckily, you can learn a few tricks from the most successful fix and flippers and how they sustain their budget during the rehab process.
Work with the Right Contractors
Connections are important in the real estate investment industry. When you identify reliable, trustworthy contractors, you can build strong working teams. To find the best contractors, ask around for recommendations and get references from previous clients. Also ask about costs and timelines upfront so that you are both on the same page. The right contractors will get the job done quickly and avoid unforeseen delays and expenses.
Stick to What You Know Works
Now is not the time to try something big. Start with the updates that you know will bring a return on investment such as an updated kitchen, new hardwood flooring or stainless steel appliances. In fact, when you’re just starting out, it’s best to take on a single family home with a renovation budget of $50,000. This is the right size job to start out with, and you can learn along the way without getting in over your head.
Choose Profitable Updates
To manage your fix and flip profit, you must be creative. Let’s say you’re planning to update the kitchen but the cabinets are in good condition. By painting the cabinets and installing new hardware, you give the kitchen a fresh look without eating into your budget. Also, take a look at the comps in your area and what types of improvements your target market is willing to pay more for.
Align with the Right Hard Money Lender
You need money to purchase the property and get it into sellable condition. A hard money lender is a great option because the funds are fast and flexible. The right private lender cares about the investment and will help you assess the best opportunities, ensure a quick loan approval and provide consultation services. Having a partner to rely on is a great way to stay on track with your real estate investment goals.
First Equity Funding is more than a hard money lender. We have experience in the real estate industry and truly care about the success of our clients. To learn more about our competitive approach to hard money, contact us today.