Are you brand new to real estate investing? Have you seen those fix-and-flip shows on TV and thought, “Hey… I wonder if I could do that?” If this describes you, this blog post is everything you need and then some.
So many people out there want to open the door to financial freedom, to kiss their boring day jobs goodbye and finally earn some excellent income. Believe it or not, it’s possible! The Investor's Edge was designed with you in mind, to help you get your feet wet with real estate investments and execute successful fix-and-flips. We have everything you could possibly need to start today and we’ll dispense a small portion of that information… now.
Let’s Cut to the Chase… What’s the Best Way to Start Investing in Real Estate?
If you’ve never done any form of real estate investment before, the best way to start on this journey to financial success is to invest in wholesale deals. A wholesale deal is a much simpler version of a fix-and-flip deal and is the perfect way to start investing without a ton of risk involved. We’ll break it down for you:
With a Fix-And-Flip Deal…
- Find a property
- Get approved for financial funding
- Get the property under contract
- Plan and execute the rehab on the property (the ‘fixing’ part of the deal)
- Sell the property for a large profit (the ‘flipping’ part of the deal)
With a Wholesale Deal…
- Find a property
- Get the property under contract
- Sell the property to an experienced fix-and-flipper for a profit
With wholesale deals, you never have to worry about rehabbing the property and putting it up on the market for resale. You can learn a ton about real estate investments while making a profit. The thing to understand about wholesale deals is the profit will be much smaller than the typical fix-and-flip deal. Wholesale deals usually make a profit of $10k, whereas fix-and-flips make an average of $30k per deal. But with fix-and-flips, you risk your own capital and have to deal with the rehab and resell processes. They can be learned and Do Hard Money has everything you need to learn these processes. However, if you’d rather start off small with less risk and a solid profit while you learn these investment intricacies, we highly recommend you start off with a wholesale deal.
What Options Do I Have if Money is Tight?
If you prefer to dive right into the more profitable fix-and-flip deals, you’ll need some earnest money to begin. Earnest money is essential in case there are some fees or additional cash-to-close required. We recommend having a savings of $3-5k to start investing in real estate. Beyond that, if money is tight, Do Hard Money can help you with that. We offer an incredible advantage for novice investors known as 100% financing.
100% financing is funding that covers the entire amount of your property purchase price and rehab costs, where you don’t have to bring a single penny of cash-to-close to the deal. As a hard money lender, we fund 70% of the ARV (after-repair value) of a property. Therefore, if your deal is profitable enough, it will qualify for 100% financing.
For example, suppose you first find a fix-and-flip deal selling for $50k with an estimated rehab cost of $30k. Then, you evaluate the property and the ARV comes back as $140,000. Our loan will cover 70% of that amount, being $98,000. Since the property and rehab costs total only $80,000, you’ll have those costs covered by the loan, plus extra for other potential costs.
What Should I NOT Do?
Here are a few common mistakes first-time real estate investors make, which you should avoid in order to be successful:
- Don’t Be in a Hurry – Fixing and flipping real estate is a long, complicated process which will require a lot of learning, growth and patience. Despite what the TV shows display, these deals do NOT happen overnight. It will be a learning process which will definitely pay off big, but it won’t pay off right away.
- Don’t Give Up – Finding profitable properties can be a difficult venture and can take time to accomplish. If you have trouble finding a property, don’t give up. Take advantage of the finding strategies we have to offer and put them into practice.
- Don’t Marry Yourself to a Bad Deal – We understand how frustrating it can be to search for months and finally find a deal, only to discover the deal is too risky or unprofitable in the long run. If this is the case, MOVE ON. There are plenty of profitable deals out there and you definitely don’t want to waste your valuable time and money on a bad deal.
There you have it! We hope this post sheds some light on real estate investments and the requirements included. You can make a great deal of money in fix-and-flips, especially considering the strength of the real estate market today. The Investor's Edge would love to help you take advantage of profitable opportunities out there and help you open the door to financial freedom.
Learn how to make money flipping properties with us by attending our next webinar.
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