Strategies For Real Estate Investing & Flipping
Do you ever find yourself driving your regularly traversed commute and come across a property that you could have sworn wasn’t there before? It looks brand new as though it appeared out of nowhere! It makes you feel like you’ve been living under a rock and missed something or puzzled as to how could they achieve such quick results in no time. Or maybe you’re curious about the secret to building a steady stream of rental income through real estate. You’re not alone. Let’s jump into some strategies for Investing & Flipping in Real Estate!
Caution: the below information only scratches the surface of the various moving parts associated with planning and process of investing in a flip property in Real Estate. Fear not, these are not impossible transactions, and the journey can be a fun, learning experience that in most cases is rewarding if done properly.
To put things in black and white, a Real Estate Investment Flip is simply acquiring an undesirable property, injecting some money into it to raise the value of that property, and reentering the market through a sale or rental to achieve a profit. If this sounds interesting to you, you’ll need to determine what the goal of your Real Estate Investment Flip should be.
You can Buy, Flip, and Hold. The intention here is to purchase a property, and hold onto it for an extended period, typically for rental income whether nightly or monthly based to generate income from rent. This can provide a steady cash flow long-term and will allow for appreciation potential.
You can Fix & Flip. In this strategy, investors purchase distressed properties, renovate them, and then sell them at a higher price per square foot. The success in flipping relies heavily on accurately estimating repair costs, managing renovations efficiently, and achieving a selling price at a profit. Again, research and analysis will vary from property to property in what it needs and its result and potential.
FOUR KEYS TO A SUCCESSFUL INVESTMENT FLIP
AVENUES TO INDUSTRIES SECTORS
Great consideration must be given to the two main sectors in Real Estate – Residential vs Commercial.
Residential Vacation Rentals
- This strategy involves purchasing properties in desirable tourist destinations and renting them out to vacationers.
- Income can be seasonal but potentially lucrative, especially in high-demand areas.
- Managing vacation rentals may require more active involvement.
Residential Long-Term Market
- This avenue is focus-driven to a steadier stream of consistent income.
- Managing long-term rentals tends to be less active in terms of the day-to-day management and frequency of attention given to this investment and clientele.
Commercial Real Estate
- Investing in commercial properties like office buildings, retail spaces, or industrial warehouses. This can often yield higher returns but requires more substantial upfront knowledge and capital.
- Leasing to businesses can result in longer-term, stable income rather than residences.
FORMULATE A CORE TEAM WHEN INVESTING
The steps you take with your agent in preparation for committing to an Investment Flip are some of the most important steps of them all. It’s important to communicate what attributes you’re looking for that would result in a successful flip and be open-minded as the market can be versatile.
Real Estate Agent – Find yourself an agent you have a good relationship with. They should be keeping you abreast of the market and advising you on facts such as price per square foot, developing areas, properties that have sold similar to what you are interested in (sold comparables), contacts in the industries, market trends, and negotiating tactics.
Financial Institute Loans Officer – Having an honest relationship with your loans officer is crucial as you would want them to be prepared with all your information, and advise on your borrowing ability, risk tolerance, and versed in your property development plans which would aid in shortening the time of what can be a lengthy process.
Contractor – Ensure that you have chosen your contractor based on past track records and their capabilities. It’s best to have two to three backup contractors for every type of building sector as this industry can be quite busy. Contractors tend to schedule their projects according to timing. Understand and note their prices and their operations ahead of time along with budgeting.
Management Team – Once you know your product, establish your project manager or operations manager for the construction phase of your Investment Flip. Depending on the nature of your Flip, determine your property management team for the running the day-to-day of your investment at its completion.
Advisor – This person will aid in the strategic planning, investigating similar projects and learning from others in the industry what works. They can also shed light on what isn’t necessary in a build, advise on the types of agreements or even cater to industry trends that can drive sales!
Legal Team – Being armed with a handy attorney-at-law whom you work well with and who is reliable and consistent will allow for a quick and easy sale process. Time is money!
Many factors contribute to any given real estate transaction. The most important thing to note in with any property sale is that there are many variables before, during, and after a sale closes that will allow you to acquire the rights to a property. Getting ahead of the market and staying abreast of what properties come on, which properties have been reduced in price and what comes off the market is the best thing any investor can do.
Also, to note, finding what you are looking for may take time or it may have been on the market for years, it will take research and most importantly it would entail advise from all your resources. Everyone has a friend in real estate or knows someone who does, best to keep them close and make them your bestie!
Your Terra Team knows the ins and outs of the real estate market, to purchasing tips, strategies and hacks to portfolio growth and investing in flipping in today’s markets. Reach out to us today!
