Fix-n-Flip - Series - As a new investor, what do I need to avoid? Part 1

I am asked questions on a regular basis on what to watch out for in a Fix-n-Flip.  Over the past five years of conducting over 300 f-n-f's we have learned a few things.  We had wonderful people come along side of us and share their wisdom when we started as well.  This series will be a glimpse inside what we have learned on this great adventure.  Please free to send us questions as well - traviststrealestate@gmail.com. 

The first way to reduce the risk of failure is to do appropriate research.  TV shows make the flip process look very easy.  THE RESEARCH is what is often left out of the show because its the BORING part according to ratings.  However, this is where the money is made .... YOU MAKE YOUR MONEY IN THE BUY (that was a super nugget of wisdom by the way).

 BEFORE YOU BUY A PROPERTY:
1.  Do your own homework.
Savvy investors learn certain neighborhoods carry better price points than others.  They also learn how to do their own comparable data.  Having trusted advisers is a good thing - realtor, contractor, financing, decorator, etc.  Make sure they are experienced and have a proven track record.  LEARN from them so you become KNOWLEDGEABLE and can stand on your own.  By the way, your best friends' brother's sister who took home economics in 1984 does not necessarily make a good decorator. 

2.  Establish systems. 
Determine closing costs, renovation costs, permitting costs, real estate fees, etc.  These are FIXED COSTS and are an independent variable in the Flip.  For example, our color pallet is the same for all homes between $100,000 and $350,000.  This allows us to control our costs.

3.  Estimate project duration
Time is money.  The longer the duration of the project, the more interest you are paying on the hard money loan OR the opportunity cost of your own money being used is lost.  Establish an aggressive, yet realistic schedule.  Most of our rehabs take 2 weeks.

4.  Profit
Know what your hard work and money will net you before you start.  This is an obviously an estimate ... you should be relatively close however.  Here is a screen shot of the exact form I use to determine value.





This is a start.  Can't wait to dive in deeper.  Have a productive day!!