Continue from Fix and flip loans page:
Step 3: Find the Right Property
When looking for a fix and flip property, it is always important to remember that you are buying it for profit and not any other reason. When looking for a fix to flip a property, the numbers should tell the story and not whether the house is in a good or lovely neighborhood.
Once you identify a property that you are interested in, it is time to compute the economics of the deal. Irrespective of how good the property looks, it is important to ensure that you are able to make money. Always have a clear exit strategy in mind and stick to the plan.
Step 4: Fixing the Property
Fixing up the property comes next after finding and buying the property. Ensure that the general contractor you choose is not only capable but also licensed. Only work with a professional that you either know personally or about whom you have received excellent references.
It is important to be careful of your choice of décor. Ensure that the flooring, countertops, walls, etc. are styles and colors likely to appeal to most potential buyers. Avoid injecting your personal tastes into a property that you plan to sell. The property should appeal to the buyer and not the flipper.
Step 5: Selling the Property
It is always important to review your business plan when it comes to setting the selling price. Ensure that you set a price that makes sense for your target profit as well as the market. It is also important to have a good idea of the lowest acceptable price that still lets you make money on the project.
You also need to get a few realtors to tour the property and give you some suggested listing prices to help you determine market value. After you have a good sense of the current market value, compare it to the expectations from the start of the project.
The best strategy is to price the property close to current market value. You are free to sell just below market price if you wish to sell quickly and have enough profit built into the project. If you have more time, you are free to price it a bit higher.
Avoid selling it above market value to recover your costs since it probably won’t recover your costs since it won’t sell at that price. If it fails to sell, it will become stale on the market thus increasing your costs and creating more problems. You will eventually be forced to lower the price and have wasted money and time.
You need to know a lot before you leap into your first fix and flip. Avoid spending thousands of dollars on seminars that promise that you will get rich quickly. It takes a lot of hard work to flip houses and you will need proper funding for your project.