Fix and flip home expenses don’t need to be as big of a burden on your next rehab as you may think, at least if you try these tricks on your next deal:
1. Find The Right Property
While far from ground breaking, I would be remiss if I didn’t at least mention that the right property could go a long way in cutting fix and flip home expenses. If for nothing else, your intentions will dictate the appropriate exit strategy; if a lot of work needs to be done on a respective property, your expenses will essentially increase exponentially. On the other hand, finding and acquiring the right property that aligns with your specific exit strategy will prevent you from paying an exorbitant amount in fix and flip home expenses.
Consider this; a turnkey property will require little to no expenses to turn over. The alternative, however, is a home that needs extensive work, otherwise known as a “gut.” Homes that you know will require a lot of work will inevitably come with more costs. That said, it is entirely possible to keep those fix and flip home expenses down by finding a property that is more in line with what you intend to do.
It is also worth noting the fix and flip home expenses that may accompany the property once the rehab is complete. Selling a home may take longer than expected, and you could face additional holding costs. It is in your best interest to understand what those costs may be, and that you can take care of them as they arise. It will also help you avoid any costs you don’t want to encounter in the future.
Knowing is half the battle; carefully consider each and every cost that may come with the property; only then can you truly cut fix and flip home expenses.
2. Provide An Accurate Cost
I can’t say it enough; the easiest way to cut fix and flip home expenses is to come up with an accurate initial estimate. Nothing, for that matter, will add more to the cost of a rehab than an inaccurate repair estimate. It is absolutely imperative that you mind due diligence and understand the commitment — both financial and time – it will take to complete a project.
3. Work In Tandem With Another Investor
I am convinced that the easiest way to save money on fix and flip home expenses is to partner up with another investor. In doing so, it is entirely possible to cut your costs in half, provided your arrangement with your partner acknowledges as much. It is important to note, however, that while costs are cut, profits will also receive a hit.
This is a strategy I recommend for new investors without access to a lot of capital, as it is a great way to get your feet wet in the investing industry. However, don’t let the lower profit margin scare you; with two people working on the job, not only will you see fix and flip expenses reduced, but you will also be able to complete a deal in much less time. That means you will be able to turn around and fund another project much faster than if you were working by yourself. The amount of money you lost splitting profits with your partner can easily be recouped on your next deal.
4. Cash Is King
One of the first things you learn as a real estate investor is that cash is king; nothing else has the power to help you close deals faster, in a more timely fashion, and for less. If for nothing else, cash is the ultimate bargaining chip, and it alone can cut the fix and flip home expenses on your next project.
For starters, paying in cash will allow savvy investors to navigate the purchase process without having to acquire a mortgage. It should go without saying, but without a mortgage looming over your purchase, you aren’t expected to pay interest. Zero financing means you won’t be confronted with additional costs just to purchase a subject property. Sometimes people will even knock a percentage off the asking price if you offer to pay in cash; the benefits of cold hard cash are as clear as day.
I haven’t even mentioned the speed of implementation it awards real estate investors. If time isn’t everything to an investor, speed certainly is. Using cash to purchase a home will get investors into a property much faster than a traditional mortgage will allow. Instead of waiting for a loan to get approved, you can start knocking down walls and rehabbing the kitchen as soon as you get in the property. That means it takes less time to complete a deal and, therefore, reduces holding costs.
Reducing the fix and flip home expenses that have become synonymous with real estate investing is an essential component to any successful entrepreneur. If for nothing else, fewer costs on a project can increase your bottom line, which I am sure everyone is on board with. If you are looking for a way to take your business to the next level, try these tips out; your bank account will thank you.
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