Flipping Houses For Fast Real Estate Profit

Flipping Houses For Fast Real Estate Profit

When it comes real estate investments, flipping houses for fast real estate profit is becoming the fastest growth sector for post pandemic real estate investing. This is one of the easiest ways to start investing in real estate but be sure you have the time as well as the money to invest before starting your journey.  

For your first flip property be sure you have at least 25% of the purchase price.  This is a good rule of thumb to get started.  CambridgeHomeLoan.com can provide the funds for renovations and repairs so you will not to include that in your purchase price or cash to close. for example if your purchase price is $200,000 and your renovation estimate is $90000 figure between down payment and closing costs you will need $50,000. As you become more experienced we will take a greater risk on you and future purchases can get down to just 10% down and for multifamily value added, we can even provide 100% financing. 

Another factor to consider for your first flip property is to keep the renovations cosmetic or light. If repairs are light or cosmetic you can manage them yourself. If repairs are more intense, structural or foundation related you will need an experienced contractor that will need to be vetted by our team.  Not a big deal but something to consider for your first fix and flip.

fix and flip home loans

FIX AND FLIP LOANS
1. Minimum Loan $100,000
2. Loan plus repairs 75% of ARV (As repaired value)
3. We will provide rehab dollars
4. Know the area comps or home selling prices
5. Click Below to get started

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One of the fastest ways to turn a profit in real estate investing is to locate a house that you can purchase at a discount to the local market, add value by making repairs and updating and then placing it back on the market for a quick profit.  

Some tips if you are looking at house flipping for profit.

  1. Your finances are at risk so treat this as a serious business and you can make serious profits. 

  2.  Do not get emotional about a purchase.  You are in this for profit and no matter how much you like a property you need to buy right to win.
  3. Find the right area. Looking at the stats below can be deceiving. These states may be showing good returns but it was specific areas in those states that shine. I would even take it one step further and say a specific block is important. (Know your market)  See some reported returns from 2018 below. 
  4. a.Tennessee
    • Average ROI: 132.7%
    • Average time to flip: 147 days
  5. Pennsylvania
    • Average ROI: 162.4%
    • Average time to flip: 199 days
  6. New Jersey
    • Average ROI: 141.6%
    • Average time to flip: 207 days
  7. Louisiana
    • Average ROI: 104.2%
    • Average time to flip: 166 days
  8. Colorado
    • Average ROI: 155.6%
    • Average time to flip: 176 days
  9. Evaluate 

1)     Treat this as a business rather than a hobby. Far too many investors do not take their investments seriously. This is a mistake because in this business time is money and every month that the house isn’t sold is a month that the house is costing you money. Create a plan, make a schedule, and stick to them both.

2)     Remember that this is a business. You are not investing in properties to make friends or seem nice. You are in this business to turn a profit. You cannot be timid about making low offers. The ability to buy low and sell high is the lifeblood of this particular business. This means that you are quite likely going to hurt feelings and make people angry (because they often place emotional prices to their homes that are simply not economically feasible). If you cannot deal with this reality then you are going to have some degree of difficulty gaining the high profits you are seeking. Nice guys finish last and you can’t really afford to do that in this line of work.

3)     Pay attention to the market. This is vitally important. Many ‘flippers’ lost their shirts in the recent near collapse of the housing market around the U. S. The truth of the matter is that the indicators have been building for years. In cities where there was once a shortage of viable housing options there are currently surpluses. This does not drive the value of properties down so much as it brings them back to their proper values. Investors that were counting on an ability to sell above the actual value of the property were left holding the bag (or rather notes) on these properties for quite some time until they could be sold. Some never managed to sell these properties and were left dealing with the expense in addition to the costs of the upgrades. Do not buy in an inflated market if it can be avoided unless it is during the very beginning of the inflation (before property developers have the opportunity to create a surplus).

4)     Do not allow it to become personal. Far too many first time house flippers decide to create a work of art rather than a business investment. It is tempting when making cosmetic and structural repairs to go ahead and create a dream home. The problem with this is that depending on the particular market you are unlikely to recoup the costs involved in doing so. The goal is to invest little and profit large. Granite countertops are lovely but not at all necessary in a neighborhood filled with those of humble means. Cater to the tastes and budgets of your target market rather than your personal tastes.

Despite the risks involved in flipping houses as a real estate investment there is no denying that fortunes have been made doing just that. Even in the current housing market there is a great deal of promise available to those who can do the work quickly and keep their costs in check.. 

Find a Suitable Market For Your Real Estate Investment

Even if you buy a reasonably priced home and stay within your renovation budget, that doesn’t mean you’re going to sell for a big profit. Studies show a wide disparity in the profits home flippers earned in different regions. According to a 2018 report by CNBC, the following states are the best for flipping a home:

  • Tennessee
    • Average ROI: 132.7%
    • Average time to flip: 147 days
  • Pennsylvania
    • Average ROI: 162.4%
    • Average time to flip: 199 days
  • New Jersey
    • Average ROI: 141.6%
    • Average time to flip: 207 days
  • Louisiana
    • Average ROI: 104.2%
    • Average time to flip: 166 days
  • Colorado
    • Average ROI: 155.6%
    • Average time to flip: 176 days

Be sure to take a magnifying glass to the home sales and profits from house flipping and recent sales in the location that you are thinking about. You might just need to venture a block or a few miles in a different direction to achieve your desired goals.  You can lower your risk further by buying in an area that has good schools, a close proximity to houses of worship, high employment numbers and low crime rates. The profit is in the exit. 

How To Profit From Your Fix and Flip Real Estate Investment

The best way to profit from your real estate investment is to finish the work and get your property back on the market fast. Fix and Flip loans are typically Private Equity Bridge Loans. An old term would be hard money but the market has become more sophisticated and most of the loans are done through private equity funds. These loans are less expensive and more forgiving they also come with no pre-payment penalty. This means that whether your loan in 5% interest or 9.95% interest (We rarely get into the double digits today), That is the annualized interest rate. If you finish and sell or refinance in 3 months, you are only paying that rate for 3 months and all of the rest of the profit goes to you and not to the lender.  Timing, timing, timing. 

We see many first time investors that start investing while still at their regular job take 10-12 months to finish light rehabs due to their schedule. I will repeat that if you treat this as a business, you can win big!  Weigh the difference between paying a contractor to conduct the rehab and the additional cost incurred by holding on to the loan especially if the repairs are cosmetic and do not need a licensed contractor. Get it done, do it right and get your property on the market as fast as possible. 
 

How To Differentiate Your Home Maximize Profits
When planning your rehab look at the houses in the neighborhood. Not just the outside, go online and review the pictures of the inside of the houses. How does your compare?  Are there all finished basements? Number of bedrooms, bathrooms all give you an idea of what is selling.  

I can tell you from experience that one way to maximize your real estate investment, fix and flip is to spend some time focused on the exterior. Number one is landscaping. I can’t tell you how many homes that I have rehabbed that would not sell and adding a landscape that differentiated itself from the neighbors got me top dollar. In one case over $200,000 more than the original asking price.

Some examples would be new sod, mulch (A cheap source for additional profits). More inner city properties add plants and planters with colorful flowers, awnings are a good add. Differentiate your property to look more expensive than the neighbors. 

The $200,000 additional profit was made on a house in Florida that after rehabbing the property, the markets went flat and the house sat on the market. Once we evaluated the neighbors all houses from the exterior, they all looked flat. Actually from the end of the block you just saw the edge of everyone’s driveway all flat as Florida typically is. I happen to have fill dirt from a project we were working on in a different neighborhood. We took this fill dirt and built a birm (a hill) in the front yard. We planted 2 large palm trees and colorful flowers with mulch around their base.  Then small mini palms on both sides of the driveway. Now when you went to the end of the block the only house that caught your eye was ours. 

The entire cost was around $2,500. The property originally on the market for $525,000 we raised, that’s right raised the price to $750,000. The most expensive house on the block and it sold in a few weeks. Think outside of the box, be creative, be informed, get to know your market and market experts (realtors) and win. if we can help you with your financing needs or if you have any questions, contact us at the email below. We have started many investors in the fix and flip business and look forward to helping you. 

    • 1-500+ properties

    • Single-family, 2-4 units, condos, townhomes, multifamily

    • 5yr, 7, 10 and 30 year terms

      • Up to 90% of cost

    • Up to 100% of rehab

    • Up to 75% of value

    • $70,000 – $100 million

Fix To Flip Home Loans

    • 1-500+ properties

    • Single-family, 2-4 units, condos, townhomes, multifamily

    • 12 To 24 month terms

      • Up to 90% of cost

    • Up to 100% of rehab

    • Up to 75% of value

    • $100,000 – $100 million

Multi Family /
Commercial Real Estate

      • 1-50+ properties

      • Multifamily, condos, student housing, 
      • mixed use w/ majority residential

      • 12 to 24 months, 5, 10 year terms

      • Up to 85% of cost

    • $1M – $50M

      • Bridge, Construction, Permanent

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