One of the biggest pieces of advice given by people with lots of experience with fix and flip loans is to do a lot of research before putting an offer on a property. But what are the things to look out for? Buying properties to rent out or fix up and sell is very different than buying a house you plan to live in. Here are three things to know before you put that offer on a property.
1. Get your finances in order. Have you found a private money lender to work with? Be sure to shop around and find out who is offering competitive interest rates. You also need a group that can move fast once you’re approved. Where will you get the money for your down payment? Do you have a plan for paying on your loan while you rehab the property? How’s your credit score?
A Good Private Money Lender is Vital for Real Estate Investors
2. Find a good neighborhood to buy in. This can be tricky, since you have to predict whether the area is up and coming, stable, or going downhill. Look online to see how properties are selling. Look for neighborhoods with good schools, even if you’re more interested in commercial property. Drive around at different times during the day. How are traffic patterns? Is there a lot of graffiti or closed down businesses? Once it’s dark, does the area feel safe or sketchy?
3. Look for structures, either houses or commercial real estate, with “good bones” that can be fixed up with mostly cosmetic improvements. A house that needs some paint, new floors, and a kitchen update will be ready quickly and for relatively less money than a house that needs major structural work. As you get more experience with fix and flip loans, you’ll be able to judge whether a more distressed property is worth buying. But don’t start there. Get your feet wet, then move on to more complex rehab projects.
LendingXpress has a lot of experience working with investors at all levels. Give us a call before you make an offer on your next property!