The real estate market in the US has shown outstanding performance when it comes to the fix and flip sales for homes. The fix and flip trends vary from location to location.
Let’s talk about some numbers. On average, investors who fix and flip homes have enjoyed up to an 86.5% return on investment. It is no surprise then to see people inclined towards investing in the house-flipping business.
For first-timers, the choice of investing in real estate with your personal savings is intimidating to say the least. But if they don’t want to put their own money on the line, newcomers have the option to go for flip and fix loans (also called hard money loans) to get a taste of the real estate business.
It is wise to examine a property first after taking certain factors into account before acquiring a hard money loan. These factors include – location, condition, and purchasing capability, to name a few.
Here are the three most integral factors that influence the acquisition of fix and flip loans.
Purchasing Cost
You can never anticipate the exact costs associated with flipping houses for sale. Other than personal preferences, many unpredictable factors also affect the cost of flipping a property.
In any market and set of conditions, the purchasing price is one of the heftiest costs that real estate investors have to bear. This also includes related charges such as property taxes, title search fees, commissions, and insurance fees. It is always better to do your homework and calculate purchasing costs as critically and realistically as you can. The goal is not to put serious pressure on your bank balance.
Renovation & Repairs
Before investing in a property, vigilantly assess the house’s condition and check if it requires retouching. Renovation and repair costs can’t be anticipated as they differ from property to property. Significant structural problems such as installing a new roof, electrical wiring or plumbing, all of these things cost serious money. Any changes to the house’s foundations can add to the overall flipping cost and may not generate a desirable return on investment. Properties that require a few cosmetic renovations, such as false ceilings, repainting, new flooring, and carpeting, are considered the best way to boost its market value.
Revamping the Interior
A significant part of your hard money loan goes into revamping the property to make it look aesthetically appealing for potential prospects. Here are a few things you can change:
Paint
Painting the interiors with a fresh coat of paint helps you set a great first impression. People tend to go towards neutral, earthy tones to bring everything together. No matter what color theme you go for, a fresh coat of paint amps up the overall ambiance and makes your house more aesthetically pleasing!
Hardwood
Flooring is one of the first things that people tend to notice. If you are looking to spruce up the floors, hardwood is a great option. It is known to attract more buyers. Some professional finishing can leave a world of difference too!
Appliances
Adding kitchen appliances like an oven, range, refrigerator, microwave, and dishwasher boosts the kitchen’s value and therefore, your property’s total value.
Bathroom
Upgrading a regular bathroom with all the necessary fixtures, including a sink, faucet, tub, shower, vanity, countertop, towel bars, lighting, and mirrors, can make a huge difference to your asking price. Basic plumbing and electric facilities are also good for attracting buyers.
Framing
Framing puts all the pieces together in a house. Therefore, it is wise to consider framing requirements at the beginning of the project.
Walls
Walls play a crucial role. In the house flipping business, people look for any signs of wear and tear. We suggest budgeting your expenses to ensure the integrity of your walls.
We advise real estate investors, especially new ones, to consider all these factors and do proper research so that they can conveniently acquire fix and flip loans.