1. Learn which improvements make the most sense. When you’re just starting out and haven’t worked on many rehab projects, you’ll want to work with an appraiser who can point you in the right direction if your plans don’t add up. It’s possible to under-improve a home and fail to attract buyers, but it’s arguably more common for rehabbers to over-improve, meaning the property becomes too expensive compared to other homes in the area or the renovations simply don’t add value.
2. Adapt your buying strategy. Low-priced properties either encourage bidding wars or fly off the market. If you’re waiting for properties to list, you’re going to have serious competition. Find ways to catch properties before they list. Work neighborhoods and put the word out that you’re looking for rehab projects. If you need to come in with a low bid due to limitations of Arizona Fix and Flip Loans, consider bargaining with the seller or offering the seller a portion of your profits to help seal the deal.
3. Avoid properties with damaged systems. Save the homes with fire or flood damage for people who have loads of experience. If you’re using contractors to do the work, you’ll probably want to avoid properties with damaged foundations or roofs too. Old or improperly-done electrical systems can eat away at your profits as well. While you can rehab properties with damage to major systems, the best bet is to focus on homes with cosmetic damage or that are simply outdated. In rehabbing these, you can get in and out quickly with minimal risk.
4. Understand your buyers. Knowing the demographics of the neighborhoods you work is essential. Some rehabbers look to up-and-coming neighborhoods for projects. This is a good strategy, but it also means you’ll need to be very mindful about the renovations you make, so you’re not creating something that people who would otherwise move into the neighborhood cannot afford. Other rehabbers focus on the best neighborhoods they can find and choose the ugliest properties in them. This strategy will enable you to focus more on high-end upgrades and may increase your profit margins, but you’ll also be working with more intensive renovations and you’ll really need to know the buyers, so you’re adding features they’re excited to pay more for.
Banks don’t readily provide Arizona Fix and Flip Loans because you, as a borrower, won’t be living in the house. That makes it too risky for them unless you happen to be one of the few with incredibly good credit and you’re choosing a property that’s move-in ready. Ergo, you’ll be looking to the hard money scene for funding with rehab projects. Each lender is different, so you’ll need to know how yours operates.
Spend time getting to know all the numbers of your rehab projects before you start applying for Arizona Fix and Flip Loans. When you add up all the expenses associated with a project, from renovations to fees and the purchase price, the amount should not exceed 70% of what the home should net you at sale.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.