The overall time it takes to complete a fix and flip investment can vary tremendously from project to project. And although there are several different factors that affect the timeline of your project, many steps must be taken in a specific sequence in order for your investment to be considered a success.
The more preparation that goes into it, including building a fix and flip timeline beforehand, the more you can potentially reduce costs and speed up the project overall.
Beginning a Fix and Flip
Before your project can begin, you must first find a good deal to invest in. Most people assume you make money when selling your flip. In reality, you make your money in the purchase.
Major factors that can make or break a good deal are location and price. Research the markets that you are considering purchasing in. This is a great way to find out what your competition is doing.
The key is to get the best deal you can up front, in a great location, so you’ll make the most profit once the project is complete.
At the same time, build a solid team to support you throughout the duration of your fix and flip. This includes finding a general contractor, an accountant, a potential partner, a potential real estate agent (if you decide to use one for your sell), and any subcontractors (such as electricians and tradesman) to help with the manual work that your newly acquired property will require.
Of course, it also always helps to have a team of friends and family to lean on throughout the ups and downs of your project. (Ups and downs are inevitable!)
Once you’ve found a great deal to purchase, set a budget for the project. You will likely need permits, materials, and much more to get everything completed.
Reflect on your goals and vision. As far as rehab costs go, can you get away with lower-end finishes? Do you like a more modern look?
Consult with your new general contractor when making any major decisions, but remember to always do your own research, as well. Make sure that your contractor gets multiple estimates from subcontractors for things like roofing, plumbing, electrical work, etc.
Are you planning to sell the home using a real estate agent? If so, keep in mind you will owe them a 5 to 6 percent commission once it is time to sell.
Creating a Budget
When creating a budget for renovating, it’s important to take a step back and remember that you’re likely renovating this property to sell—not to keep for yourself. So consider the neighborhood, the costs associated with this particular property, and the price you think you can sell for.
You want to maximize your profits by renovating the property in a way that will come off well to potential buyers, thereby getting it sold quickly. That being said, the following might seem counterintuitive but it’s important: you don’t want to over-improve the property during a flip.
Why? You don’t want to end up with the most expensive house in the neighborhood. It’s much less likely to sell—and almost certainly won’t sell quickly. You want to keep the renovations in line with what is happening in the neighborhood. This has the added benefit of maximizing your profit at the completion of the project.
Financing Your Flip
It is now time to finance your deal. Remember: time is money!
There are many traditional and creative ways to finance a fix and flip, and some might save more time than others. Investors who need to move quickly could finance their flip using a hard money loan instead of traditional bank financing.
In many cases, lenders who extend this type of loan have the ability to approve an applicant within 24 hours. That way, you can close in just a few short days, which allows you to move the whole process forward faster.
Renovating Your Flip
Now, the fun begins—renovation time! The duration of the renovation work on your fix and flip depends on what updates are required for your particular property. Having a general contractor who is dependable and honest can also keep the project moving along at an optimal speed. On the other hand, a contractor who has multiple projects going at once may interrupt your timeline since your project is not their only commitment.
During the renovation process, take pictures of your progress periodically. This can be a simple, positive reminder of how far you’ve come.
Most flippers experience their fair share of unexpected issues, so finding ways to stay motivated throughout the process can help stave off frustration and keep you on track.
Selling Your Flip
Finally! The manual work is complete, and it is time to put your home on the market. This may require heavy marketing on your part, particularly if you decide to go the “For Sale By Owner” route.
You must consider landscaping, staging the home, taking high-quality pictures, and more.
Take a step back and look at your property through the eyes of a buyer. What last-minute changes and additions can you make to help take the buyer across the finish line?
And if you are an investor who is looking to flip multiple properties, it might be beneficial to look into becoming a realtor yourself!
There is no right or wrong amount of time it takes to complete a fix and flip project. Every property and investor is different. But with the right planning, preparation, and resources, there’s a high chance it’ll be a successful project and an experience you’ll benefit from.
Are you considering a fix and flip? Have you determined a timeline? Have you assembled a team?