If you’ve been wondering what happened to our blog as of late, fret not. We simply took August to focus our efforts on development. As we approach the finish line with these features it’s time to get back to blogging. If you’re reading this post for the first time, let me catch you up. At Revestor we’re rolling out changes to our application that will allow you, the user, to run investment calculations three different ways over live listings. Nationwide! FOR FREE!!!
The three different ways are….
Long Term – Buy & Hold
Short Term – Vacation Rentals
Fix & Flip – Rehab & Resell
This week we’re here to talk about rehabbing and reselling properties. Reality TV has made the fix & flip approach to real estate investing look fairly painless and almost fun. Real estate investing is a business, not a made for TV show so we want to give you our basic 5 step overview to better understanding this approach.
Step #1 – Establish a team
You’re starting a business. One thing I’ve learned over the years is that the smartest people hire smarter people. That said, you’re going to need an attorney to set up an LLC to hold the property. You’re also going to need a good CPA and insurance agent to further protect this venture. Once you have these folks in place you’re going to need the second part of your team which is the Realtor, lender and contractor. Once you have this network you’re ready for step 2.
Step #2 – Get familiar with your market
And by get familiar with your market I mean know your numbers! If there is one thing and one thing only that you take from this blog post, please let it be this. Your resale price is completely hypothetical at this point but all of your other costs are very real. It’s important that you know your market, comparable listings, recent sales, rehab costs, carrying costs, etc.
Step #3 – Acquiring property
Once your team is in place and you have a firm grasp on the market conditions you’re ready to acquire property.
TIP! Create a free account with Revestor so you can receive alerts when properties matching your investment criteria come on the market or change in price.
Knowing your numbers will help you and your Realtor make the most of your time when it comes to writing offers. A lot of agents prefer not to work with investors because they don’t want to write dozens of low ball offers. Be the educated investor that not only knows the market but knows the costs of rehab and potential profit.
Step #4 – Rehabbing the property
Once your offer has been accepted and you have possession of the property it’s time to start the rehab process. Here’s where you need to put on your project manager hat to make sure that your contractor is staying on time and on budget.
Step #5 – Selling the property
Take stock of how the market has changed during your rehab period. Pricing the property correctly is imperative to a successful flip. A couple items to take note of here. First, don’t overprice the property. Overpricing a property may result in few (if any) offers. This may lead to a reduced listing price and increased carrying costs (time). The fee (typically 5-6%) you’ll pay to the listing agent and buyer’s agent is also negotiable.
Was this helpful? Let us know in the comments below what topics you’d like to see discussed in upcoming blog posts!
As always, happy hunting!