Flipping isn’t easy, and you must focus on all of the crucial aspects of the game to ensure that you’ve more wins than losses. With the correct strategy, you can ensure a good return on investment in most cases:
Focus On Budgeting
The first aspect of fix and flip is budgeting. You spend money to make money, so you must be spending the right amount of money on the right project for the best return possible. In the fix and flip industry, people heavily follow the 70% rule to ensure that they’re secure.
It states that for acquisition, repair, and practically every cost on the property, you should be spending only 70% of what you expect the selling value of the property will be. It helps maintain a healthy return on investment while cushioning you from any unexpected changes in the market that you haven’t thought out.
While some call it haggling, the right word is negotiation. In the construction industry, the price is never set in stone and there’s always room to move things around. Anywhere from labor to materials, you can get a sweet discount if you know how to deal with the right people.
It’s also important to know when to back off from a negotiation. In the fix and flip industry, making connections is important, and if you’re known as a haggler, contractors and suppliers will be less eager to work with you and provide you with incentives.
For people that don’t take on a fix and flip operations often, it makes more sense to rent out equipment because you won’t be using it that frequently so the purchase will be a waste. But once you rent more consistently, you’ll realize that your rent costs are surging to the point where outright purchasing equipment will be better.
Not only is it a cost-effective approach, but it does reduce the hassle of acquiring equipment and then returning it frequently. You also worry slightly less about damaging any equipment and having to pay extra to the lender for it.
Provided that you can find capable yet cheap resources, you can save a good amount of cash on your labor expenses. The first solution is to look for unemployed students and locals that want some work on the side that’s not too complicated. You can get them to clean up the place, rake some leaves, and do other menial tasks that don’t require expertise for a cheap amount.
Similarly, many contractors moonlight to make money on the side, and their services during off-work hours are cheaper than hiring someone during the day to do a job full-time for you.
If you’re looking for flip loan financing options and hard money loans from private money lenders, consider working with us at Insula Capital Group. We offer real estate financing, investment home loans, hard money construction loans, commercial bridge loans, and more.
We offer attractive hard money loan requirements to facilitate working with us and take things to the next level. Reach out to us to get started.