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Fix and Flip

Fix and Flip

Every property you purchase is going to need some sort of rehabbing work to bring it up to its most profitable value. Rehab is the ultimate exit strategy. Whether it’s buy, fix and sell; or buy, fix and hold; fix is the key word. Here, we demonstrate how to find the capital and how to find and organize the team to do the actual work – so you can remain focused on being the real estate entrepreneur you need to be.

Why Do Rehabs?

  • You have direct control of the value added and scope of work
  • There’s a never-ending inventory
  • You can get the “ugly discount”
  • Fix a “problem”—make a profit
  • Create change in a neighborhood
  • Works in all markets and locations
  • Profit-controlling Investment

The Reality of Fix & Flip

“Flipping” is a vague term in this business, but is most commonly known as “buy, fix and sell.” The thing is, professional investors understand that flipping could mean to buy, fix, and sell; or buy, fix, and rent; or even buy, fix, and lease option; or to simply wholesale. In any case, it’s a fundamental strategy that needs to be understood to properly analyze a deal no matter what you intend to do with the property.

We hear all the time, “I don’t want to swing a hammer!” and we get it. The reality is that nearly every property you acquire will need some sort of rehab/renovation work, unless it’s a new construction, and understanding those numbers is critical to understanding if something is actually a deal. Just because a property is cheap, doesn’t mean it’s a good deal. You must be able to look at the piece of real estate itself, where it’s geographically located, what’s happening in the market nationally and locally, what the property has to offer, what needs done to get it up to the market standard, what can it sell for, rent for, what’s owed on it. So many things go into understanding the numbers but once you do, you may find yourself in a great position to make a lot of money if the deal is properly structured and executed.

We have trainers who have spent years fixing and flipping properties and analyzing deals across the nation. They will tell you flipping is a great way to generate quick money, but you must know what you’re doing. Otherwise, you may find yourself in a sticky situation, potentially facing a lot of risk and losing lots of money.

Two of the biggest hold-ups for people who want to flip houses are their lack of knowledge and their lack of funds. While there are many creative ways to fund any real estate transaction, having a general understanding of how banks work, what they look for to approve an investor, and how real estate is looked at through the eyes of a bank is critical.

While several people who flip houses do not always fix their own properties, understanding the numbers behind fixing the property is what separates an amateur investor from a professional. What would it cost to get the particular property up to its highest value and what exit strategy will allow you to make the most amount of money? These are the types of things you want to think about when flipping a house and what Legacy can train you to do.

Areas of Review

Takeaway

Big picture takeaway points

  1. No Matter what your exit strategy is with the property you must know how to analyze the deal first.
  2. If you are looking for a deal nearly every property will need some rehab, as we are not buying new buildings. You must look at what it is and see what it could be.
  3. You must have two key components. Knowledge of how the funding will work and how to analyze the deal.

Reflection

Self-reflection questions to think more about the content

  1. Am I educated on this strategy? Educating yourself will always be step number one, the more knowledge you have the less risk you have.
  2. Where do I plan to buy? Once you know how to analyze a deal you can buy in any city sight unseen. If you know the area, know the numbers, and have multiple exit strategies and a power team in that area you don’t have to be physically present.

Legacy’s Building Wealth Club offers you the financial education needed to pursue your goals. Let our education and experience lead the way!

Legacy Wealth Club