Have you been considering getting into real estate investing, but you don’t really know where to start? For most investors, a fix and flip project is the best way to familiarize yourself with the world of real estate. It hits all the vital steps of the investment process including researching, planning, buying property, performing renovations, marketing, and selling. It also serves as a great launchpad for other, more long-term real estate investments. A fix and flip project can be a great investment for a number of reasons. Continue reading to see why you should consider one for your next real estate venture.
High Profit Potential
Fix and flip projects make attractive investments because they offer substantial returns in a relatively short amount of time. The average return for fix and flip projects was 22.5% among all investors in 2023. With careful planning and hard work, a flip can be completed in 3-6 months, which makes it a great way to generate quick cash. The key lies in finding neglected properties located in great areas, and then renovating them to match or exceed the value of surrounding properties. Try to find opportunities in homes that are being sold below market value, as these will make for the best flips.
Active Involvement in the Investment Process
If you like to have a degree of creative control with your projects, home flipping might be perfect for you. Flipping involves sprucing up a property, and it takes a creative eye and good plans to make that possible. It’s also an opportunity for you to transform a distressed property into a desirable one, and get a sense of satisfaction from doing it yourself. You have the creative freedom to choose designs and features, but be sure to pick ones that will add value and increase potential demand for the home. Your design decisions should be fairly neutral so they can still appeal to any buyer.
Rapid Turnaround Time
One of the main advantages of a fix and flip project is the rapid speed which they can be completed. Veteran flippers aim to complete their projects within 3 months, and they can complete multiple flips within a year’s timeframe. In order to have a quick turnaround, you should prioritize planning your investment well so that you can get renovations out of the way and begin the selling process. There are many holding costs to consider such as mortgage interest and home insurance, so the faster you can get a flip done the more profitable it will be.
Diversification
A home flip may serve as a quick way to diversify your investment portfolio. If you have too much exposure in a particular market, investing in a different market with a home flip can be a smart move, helping you spread the risk across multiple areas. Or you may typically be a long-term rental investor; flipping allows you to explore a different investment category, and the shorter timeline lets you see if it fits into your real estate strategy without having to make a big commitment.
An Accessible Entry Point
Most people have the misconception that getting started in real estate takes a significant amount of capital. In reality, most investments can be obtained with only 10-20% of a down payment. Flipping helps investors get into the world of real estate investing since it offers beginners a great way to turn what little capital they have into a significant amount. A home flip can be the perfect launchpad for getting into the world of real estate, as the return can be immediately reinvested into a larger future project.
Contribution to Community Revitalization
Fix and flip investing helps contribute to housing availability by taking neglected properties and turning them into desirable homes when many markets have a low supply of housing inventory. Renewing the aesthetic appeal of a property also brings up the value of surrounding homes. By utilizing fair housing practices, investors can feel good about their projects having a positive impact on the economic development of their communities.
RCN Capital
Do you have a real estate project you would like to obtain financing for? RCN Capital lends to real estate professionals, commercial contractors, developers & small business owners across the nation. We provide short-term fix & flip financing, long-term rental financing, and new construction financing for real estate investors. If you are looking to finance an investment with a bridge loan, RCN Capital has competitive loan options available.
