So are you looking to do your first real estate deal this year? What is your plan? Hopefully you have been doing your homework and you have laid out your plan. Here are 5 ways to avoid losing money on your flip.
Get The Proper Training
The first step is getting the proper training for learning the processes for buying, fixing and selling property. It all sounds easy, but unfortunately like most things there is a lot to learn and you will want to get started as soon as possible. When looking for training seek out people who are actively doing deals. Tweet This Stay away from those training companies that just focus on classroom training. That’s not so say you can’t learn from them because you can. However, many of these companies tend to be over priced and are more likely to teach things that may no longer be relevant. Also when you are first getting started I would recommend local training over the larger national training companies.
Start attending your local Meetup groups or REIA meetings and learn who the key players are in your local market. Networking and building your team is vital to your success. Tweet This
Get A Mentor
Selecting a mentor is a personal decision, however, I would once again recommend selecting someone who is actively doing deals. This could be a person in your local market or in another area. Obviously there are advantages to have someone local, but it’s not required. A good mentor will help to minimize your risk, shorten your learning curve, provide resources and hold you accountable. Working with a mentor will allow you to accomplish you goals faster and more efficiently then trying to learn everything on your own.
Meet with some of your local hard money lenders and find out their rates, terms and requirements for borrowing money. Having a variety of financing options will ensure you can close on the deals you find. The more options you have the better the rate and terms you will have access to. Also look into your smaller local banks and see what opportunities may exist. Your smaller local banks will offer funding at a lower rate, however, you need to review their other requirements. They tend to want to work with only the most credit worthy borrowers. Also consider working with an equity partner, as this can be another good option.
Buy It Right
If you are serious about your interest in flipping houses please understand that you make your money when you buy the house right and you realize your profit when it’s sold. So this requires that you understand your market and your target area. Make sure you do the proper research and review all the numbers. You will have to get used to making really low offers and be willing to walk away if the numbers don’t work. Your financing options can give you some flexibility; however, be sure all the numbers are correct and be conservative. You will also have to have a budget for unexpected repairs because they will always come up.
Find The Right Contractor
Selecting the right contractor can make the difference between losing and making money. Tweet ThisThis is a big factor to realizing your goal of a successful rehab. Having someone you can trust and depend on to complete your project on time and on budget is important to reaching the finish line. So be sure to properly screen your contractor. Get references and referrals from other investors. This is where a local mentor would come in handy. You will have access to their resources as well.
When getting yourself ready to do your first flip, be sure to keep in mind the tips mentioned above, and you will lessen your risk and make your investing life much easier.
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