Whether it’s today’s Wayne Brady version or the classics with Monty Hall – wide lapels and skinny microphone in tow – Let’s Make a Deal is a game show that we can all relate to.
So in that spirit, Walnut Street Finance introduces Let’s Make a Deal: The Fix and Flip Hard Money Version. Cue the music and bring out Jamie Farr and Nipsey Russell!
Imagine you, the investor or developer, have two real estate investment choices, but only enough financing resources for one. Will you keep the presumably safer option that you have under your control or exchange it for the riskier, but perhaps more profitable, opportunity?
Be careful, you don’t want to get zonked.
So, how do you find the right investment property? Which property is the best to renovate? Here are some factors to consider:
- What is the potential profitability? Look hard at the real estate comps; Market conditions, buyer demand and school quality are just a few key statistics to hone in on for each property. When deciding between property types, is one product easier to sell than the other?
- Are there problems with title? Does one of the real estate investment properties have complicated title issues or boundary disputes?
- Location! Purchasing in an up-and-coming neighborhood might score you a good deal, but make sure there is enough buying demand for a quick sell. A stagnant listing drains profits very quickly.
- Zoning. Is zoning an underlying issue with one of your real estate investment choices? Construction can’t take place on your property until zoning issues are resolved, which can take months.
- Renovation risks. Does one property require a simple rehab while the other entails moving walls and adding square footage? Although more renovation tends to equal higher profit, it can also open a can of worms and lead to unexpected costs.
- Convenience. You’ll be visiting your real estate investment property several times a week and dozens of times over the course of construction, so your project evaluation should factor in distance, time and convenience. Distance and time adds up quickly, and you may be better off spending those extra hours overseeing a job site than sitting on the beltway.
- Branding. Which property is better for your business in the long run? Every completed project becomes a living business card and a reflection of your business acumen. Your real estate investment portfolio should qualify you even before you reach out to your hard money lender to finance your next deal.
Bottom line: two properties may seem like equally great deals on the surface, but by taking these factors into consideration, you will probably make the better (and more profitable) choice.
So, Let’s Make a Deal! If you need a hard money lender for your next project or are just looking for a bit of real estate investment advice, contact us today!