Key Ingredient to Fix-And-Flip Success
There are a lot of factors which make up a profitable real estate investment deal. But which is the most important? What is the crucial, key ingredient that determines whether or not your fix-and-flip will flop? The Investor's Edge is here to shed some light on the subject so you won’t waste a single dollar in your investment profits.
Three stages make up the fix-and-flip process:
- Finding a Property
- Rehabbing the Property
- Selling the Property for a Profit
Many new fix-and-flippers believe that the key factor leading to a massive return on your investment lies in the rehab. If they can spruce a home up to the nines, they’ll receive massive profits, right? WRONG!
Other novice real estate investors believe that the key ingredient to fix-and-flip success lies in the property’s location. If they find a home in a fantastic area, they’ll definitely get a huge return on their investment, right? WRONG!
Believe it or not, there is one important element which, if ignored, can bring the profits of a home in a highly-desired location with a fantastic rehab plunging down into the gutter. This key factor is often overlooked and underestimated, which unfortunately brings about the downfall of many a potentially profitable deal.
The key ingredient to fix-and-flip success is the PROPERTY’S PURCHASE PRICE.
Now, we’re not talking about the price for which you ultimately sell the home, though that factor is important, too. We’re talking about the original price you pay for the property before the rehab takes place. If the property purchase price is too high, regardless of other successful factors which play into your deal, you WILL NOT make a solid return on your investment.
Let’s create a scenario to illustrate our point:
Joe wants to fix-and-flip his first home. He finds the PERFECT opportunity in a hot real estate market in Chicago, IL. Joe goes to purchase the home with great eagerness and not much else. The seller, Fred Ruse, sensing Joe’s excitement and lack of neighborhood comps, ups the purchase price. Joe, having searched for a good real estate deal for months and not wanting to come up empty-handed, agrees to the price and buys the home for $100,000. Joe then brings the home to a hard money lender willing to fund 70% of the ARV. Unfortunately, the ARV (after-repair value) of the home comes to $150,000. With a bid of $30k for the rehab work, Joe now needs to come up with over $25k to make the deal happen. With major cash-to-close owing, the overall profit on his deal shoots down.
Suppose Joe went to The Investor's Edge before this fiasco occurred. Then, we would have provided a thorough evaluation on the property, outlining exactly what it’s worth, the ARV and neighborhood comps. Joe could have gone to Mr. Ruse and told him where to put his $100k price tag. In fact, the property was only worth $60,000. If Joe had gone to The Investor's Edge for help, he could have then had both his property purchase price and rehab costs covered in the 70% of the ARV. The deal most likely would have qualified for 100% financing and his profits would have risen sky-high.
Believe it or not… this scenario ACTUALLY HAPPENED with one of our borrowers! As a result of our help, this borrower saved $40k!
The Investor's Edge is here to help you open the door to financial freedom. We helped hundreds of borrowers drastically increase their overall profit just by shedding some light on each deal. We provide a special tool exclusive to our borrowers, called the Advanced Deal Analyzer. This tool helps determine the risk factors, ARV and overall estimated net profit for each deal. Thus, the ADA saves a ton of money off the purchase price. You can use the following resources to negotiate property prices with sellers:
- The Advanced Deal Analyzer
- Neighborhood Comps
- Property Evaluations from the DHM Team
The time is now to earn more profit than you ever dreamed possible by investing in real estate. You don’t need any previous experience, a minimum credit score or a down payment to start right away! All you have to do is register and attend our next webinar to see how it all works.
COMMENTS