What do I need to know before purchaseing a fix and flip?

3 Replies

I found a house that I would like to buy to fix then flip. I need to know what questions to ask before purchasing like do I need to ask if there’s any tax liens on the house? Should I ask the agent how much equity is in the home? What else do I need to know before purchasing?

If the house is on the market you should get an agent to represent you and help you with due diligence. 

You can ask about liens etc but mortgages will not affect you.

Big thing is you need to be spot on with your ARV and remodel costs.

Originally posted by @Jazmin Moore :

I found a house that I would like to buy to fix then flip. I need to know what questions to ask before purchasing like do I need to ask if there’s any tax liens on the house? Should I ask the agent how much equity is in the home? What else do I need to know before purchasing? I wrote a 5000-word article on due diligence (basically what you should do before and after you get a property under contract). I think it will be a major help to you: 

I wrote a 5000 word article on due diligence (basically what you should do before and after you get a property under contract). I think it will be a major help to you: https://www.biggerpockets.com/blog/due-diligence-ultimate-guide

Originally posted by @Jazmin Moore :

I found a house that I would like to buy to fix then flip. I need to know what questions to ask before purchasing like do I need to ask if there’s any tax liens on the house? Should I ask the agent how much equity is in the home? What else do I need to know before purchasing?

Please don't take this as rude as it is not the intent but it is the intent to pose a wake up call for you.

If you are asking the above question after already finding a home to fix and flip, you are not yet prepared to be searching for the acquisition yet. You need to know the market you are investing in inside and out, know where it was 12 months ago, 6 months ago, 3 months ago, etc. Know what streets and neighborhoods are bad, decent, good, excellent. Know the school rankings, crime rates, unemployment, population growth, etc. 

You need to then know how to estimate repair costs which takes practice and lots of it. You need to know how to nail down the ARV (after repair value) within 5% or better which also takes lots of practice and is just as much an art as it is a science.

You need to know how to fund the deal and negotiate said funding. You need to know how to negotiate the purchase (don't rely on the agent as they are NOT all created equal) and you need to be very, very familiar with purchase contract verbiage and what should and should not be in your agreements.

You then need to build your team of contractors, sub contractors, materials suppliers, etc.

At that point, you are now ready to start your acquisition hunt and not before that. 

I hope this helps enlighten you on your journey. Ultimately, it is very important to not strike out on your first deal.

 

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