It's tempting to visualize how a remodeled condo will be furnished, or to fantasize about how to spend your share of the "flipping" profit. But without a specific action plan that includes a detailed cost estimate, a realistic schedule and the talent to make it all come together, such dreams can become exercises in futility.
The business of real estate investing is just that, a business that requires mastery of a specific set of skills. It's not rocket science, but it's not as easy as flipping burgers either. Here are some tips to assure that your dreams of fix and flip success become reality.
If you are tempted to jump into the real estate construction and development market in northern Virginia, this is a good time. Demand is high, sales are brisk, prices continue to rise, and hard money loans for Virginia real estate projects are available.
But, the knowledge and experience that makes it possible to buy properties at the right price and then renovate and resell them at a profit is an acquired skill. Before you jump in to the fix and flip pool, there are certain things you should know about the property and area to better your chances of getting the loan approved. As you develop a track record, you will gain confidence, knowledge, and will likely establish an ongoing relationship with your hard money lender.
Know your Market
There is no substitute for due diligence when it comes to buying and selling real estate. Take the time to examine the statistics. Drive various neighborhoods, visit homes that are for sale, study the comps and be aware of average days on market as well as listing prices and sales statistics. Consult with real estate pros before you set your price and be aware of current architectural and design trends.
Know your CostsPrivate lenders for projects in suburban Virginia will require detailed cost estimates, whether you plan simply to refresh and renew the decor or undertake a major renovation. Be sure to include the costs of borrowing as well as fees associated with permitting and code compliance. Understand the need for adequate insurance and be sure to comply with any licensing requirements. Develop ongoing relationships with reputable subcontractors.
[ Read more: Tips on How to Achieve Fix and Flip Success ]
Know the Potential
Buying a home is often equal parts emotional reaction and financial reality. Appeal to prevailing buyer preferences for green features, sustainable materials, technology and energy-efficiency, in addition to being aware of design aesthetics, safety concerns and convenience. Develop a checklist to aid in evaluation of potential projects. Know that a low price is not your only goal. Justify higher costs if you can demonstrate a higher return.
Plan for Contingencies
Give yourself some wiggle room. If there is one truism in the construction world, it is that the work always takes longer and costs more than you expect it will. Plan on delays and cost overruns. If they don't occur, celebrate. A savvy hard money lender like Walnut Street gives you the advantage of a financial partner with on-the-job expertise. Not only are we innovators in the world of finance, but we also have real world experience in construction and development - and we happily share our knowledge with our borrowers.
As one of the premier private lenders in the metropolitan Washington DC area, Walnut Street Finance evaluates every loan individually based on a site visit. We can often give you an answer within just a few days, whether your project is in suburban Virginia or Maryland, or situated in an urban DC neighborhood.