The Top 3 Questions to Ask When Evaluating a Fix and Flip Property
Fix and flip projects are immensely popular in the current market. Whether you choose to fix a property because of the rising market, the popularity of fixer-upper TV shows or simply enjoy working in the real estate industry, here are three critical questions to ask whenever you evaluate a property for a potential flip. These questions help determine whether you’ve found a winning property or need to keep looking.
1. What are the Perks to Owning This Property?
First, you need to think about what value there is in this property. Ideally, you want a house that needs minimal work in order to achieve maximum profits. If it’s your first time fixing up a property, you may not want to dive into a major renovation project. These big projects take more time and money and carry greater risks than smaller, quicker flips.
Consider the factors that are out of your control. You may be able to fix a certain room or update the exterior, but you won’t be able to change the location or the basic structure of the property. Look for properties that are in a great location and have an ideal layout for your fix and flip plan.
2. What are Comparable Properties?
What’s currently on the market? Before you buy, check the market to see what is and isn’t selling well. Certain areas favor larger or smaller houses or a specific layout. Don’t assume you know what sells well in one neighborhood just because you’ve flipped a home in another.
Comparable properties not only give you valuable information on the average cost of homes in the area, but you can also look back on which types of homes sold quickly. Do three bedroom homes sell in just a few weeks? That’s a good sign that you may want to invest in a home of this size or larger to appeal to the buying market.
3. Can You Make a Profit?
In the end, the most important factor of any flip is the profit margin. A stunning remodel may make the buyer happy, but without enough profit, your days of fix and flip real estate may be numbered. Run a quick estimate of the cost to renovate your chosen home and determine whether that property will sell for enough of a profit for you to continue investing in real estate. With some quick planning and financial assistance, you’ll get started fixing up houses and selling them for a profit.
