Consider flipping investment properties
Flipping investment properties has become one of the most popular ways to start investing in real estate. Their is so much private and institutional money being offered to banks today that we can lend 100% of the purchase and 100% of the rehab for many investment scenarios even for first time investors.
Even though there is always an element of risk with any investment property, a good deal of the risk can be taken out by having the right lender help walk you through the process.
A few elements that can help you succeed.
Try to find a local agent to help you identify a good flip property. Remember agents are in business to sell you but you can also use their knowledge and experience of your area to your advantage. THERE IS ALWAYS ANOTHER PROPERTY. Don’t let your agent press you into the best deal of your life, there is always another best deal of your life, down the road. An experienced realtor can give you information about your market. print comps showing how much other houses in the neighborhood have recently sold for and how much properties with more bedrooms, bathrooms, square feet and upgrades have sold for being very important for your first investment property. You make just as much money on your purchase as on your sale so “Buy Right”!
Use the right lender
You will most likely get a bridge loan. The type of loan and fine print is very important. The rate, term and timing need to be in line with the asset and your ability to prepare and sell the investment asset.
Find an experienced contractor even if you do not use them on this property. I would recommend light repairs for your first investment property. If you can find a property that just needs paint or landscaping that would be best. Most flip properties typically will need a new kitchen, cabinets, flooring. Next would be updating bathrooms. I would avoid adding square footage to your first property or any major construction. Have a contractor or 2 or 3 go through the property with you and provide a detailed estimate of repairs so that you understand the pricing and timing. The bank will also need a copy of this.
You can download an example of what kind of a detail we will need as a lender for repairs by clicking on the sample scope of work below.
To understand how to be successful in the fix and flip investment business you need to know that just like everything else real estate related time is everything. In this case the faster you fix your property and get it sold, the more money you will make. Im not just talking about your profit between your purchase price and your sale price but your expenses will be minimized. Fix and flip loans do not have a pre-payment penalty in most cases so if you are paying 9% interest annually, after 3 moths you only paid 2.25% in interest. Amazing right?
Think about investing in rental properties
Investing in rental properties is another way to get started in real estate investing. You can do this buy buying a duplex and renting one unit while living in the other. You can also take your flip property and refinance it with a long term rental loan.
Once your long term loan is in place you can look to maximize the rents as each tenant moves out or by adding amenities. Building a portfolio of investment properties is a great way to build wealth and a business to be proud of. More on this in our next article.
Familiarize yourself with the questions in a Fix and Flip application. Click the button below and read through the loan application. This will give you the components of and investment property that a lender looks at to make a lending decision on your property.Any questions please call.
Contact A Professional To Help
To minimize your risk think about reaching out to a professional. CambridgeCapital.org has spent over 35years getting clients started investing in real estate. Even though we are primarily a lender, we openly provide real estate investment advice to newbians as well as experienced real estate professionals. Whats more we do it for free. Our clients over the years have started with us just renting a room, then buying their first investment home. Some of them are building high rises today and some have hundreds and even thousands of rental properties.
If you want to build wealth, be your own boss and control your future, start investing in real estate today. Feel free to contact CambridgeCapital.org on through their website or by calling 800.826.5077. If you already found a property and would like advice on the best loan product email to info@cambridgecapital.org for a free analysis.
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