As of 2023, 95,906 houses were sold annually with median sale price reaching $339,900, a higher value than compared to past years.
The demand for housing has made the state of Tennessee a crucial spot for such projects.
However, just because there is a demand does not mean every investor delivers to buyers’ expectations. Making the most of your fix and flip loans in a place such as Tennessee hinges on making strategic decisions at each stage; getting the loan, planning your finances, picking a property. This blog shares tips that will help you succeed in this renovation process.
1. Secure the Loan Based on Market Trends
Property pricing and sales trends in Tennessee vary across the seasons; the warmer seasons mark a peak in prices and prove favorable for property sellers. Whereas, fall and winter see a drop in prices; it’s the ideal time to secure a good deal on available properties.
You should ideally submit your loan application at such a time that it’s approved and processed before the cold season. This way, you can get a better rate, work on the renovations during the off-season and have the property listed for purchase by spring.
Additionally, you can work with lenders that provide quick approvals to ensure your plans do not witness a last-minute delay.
2. Be Realistic with Expenditure
Working on a fix and flip loan project comes with a lot of creative possibilities; however, investors need to be realistic with the goals they’re setting for the provided funds. More importantly, they need to keep permits, accidents and repairs under consideration.
You should ideally begin a layout of your plan by listing all costs such as appraisals, inspections, utilities, loan interest, and insurance. Leave a decent percentage of about 20% for unexpected expenses.
Problems such as structural issues or poor electrical systems are the leading causes for inflating property costs in Tennessee; make sure you keep such repairs as a priority.
Try not to spend beyond the basic necessities of your project, only renovate areas or objects that you know will definitely increase the property value.
3. Choose a Property Wisely
You cannot turn every run-down property into a highly-demanded residence. The location/ neighborhood a property’s situated in should have just as much potential as the property.
After knowing what’s in demand, narrow your options by choosing a property that needs more cosmetic than structural repairs; it will save you plenty time and resources.
It is important that you’re not only purchasing at a good rate but selling at a high one; make sure the property you’re getting is located in an area with high buyer demand during peak season.
4. Evaluate Your Contractor Team in Advance
Once you have the property and the funds, your project’s progress is entirely determined by the contractor you hire; their team oversees all construction, repairs, system updates and more. A delay or error from their end will bring down the value of your property.
After fix and flip loans, your priority should be hiring the right contractors on time. Warmer months welcome a high demand for contractors in Tennessee, so you want to make sure you’ve hired a team before it’s too late.
For quality control and a reliable service, look for contractors that carry experience, certifications, licenses and are insured.
Reading up on reviews from their older clients and projects will also help you visualize the type of service you can expect.
5. Know What an Exit Strategy is
If your property does not sell well, it defeats the whole purpose of the fix and flip project.
A professional investor won’t stress out if their property doesn’t sell immediately, they’ll have another exit strategy ready.
You should know how to effectively rent the property on long-term or short-term basis while covering holding hosts.
Having a backup strategy saves you from giving into a bad deal simply because you cannot find another and saves you from bad-decision making, giving you time to think of another strategy.
Apply for a Fix and Flip Loan Now
Using fix and flip loans in Tennessee is a long-term investment due to the state’s growing nature and housing market; it’s a chance to make the most of your skills as an investor. However, working in a saturated market, you need to be careful and smart with your decisions and timing. With a realistic plan and budgeting in place, you can effectively manage the project and sell the property at an amazing rate.
Looking for efficient and experienced hard money lenders in Tenessee? Reach out to Insula Capital Group.
Providing loans that cover up to 100% construction cost and 75% ARV, their services guarantee you don’t compromise your renovation’s budget. With decades of experience, they provide quick services and process loans on time.
Want to learn more about their loan program? Check out the funding breakdown here!
