Every fix-and-flip investor's success hinges on one critical element: having properties to flip! Understanding how to acquire viable investment properties is crucial to all investors, from beginners to the most experienced fix-and-flip veterans.
How is it done? Exploring the methods of experienced "fix-and-flip investors is a great road map.
How successful fix-and-flip investors find properties
Let's look first at how the most successful fix-and-flip investors find their properties.
First and foremost, expert fix-and-flip investors have a deep understanding of the costs associated with each investment property. They find the best investments by identifying properties whose costs don't prohibit profitable investing.
It sounds simple, but as U.S. News & World Reportlays out in many of its tips from expert fix-and-flip investors, the question of cost is complex. Managing costs affects every part of the fix-and-flip investment process, from the initial purchase of a property to renovation to closing. Understanding how these costs affect your fix-and-flip investment will help you identify more profitable properties.
Second, fix-and-flip investors find properties by building networks that bring properties to them.
"You will never hear a high-level investor say they "can't find any deals"," writes real estate investor Justin Williams. "Truth is, they aren't really even "looking for deals." Their business is set up in a way where they have a constant and consistent lead flow."
Practically speaking, this means an expert investor is deeply and intimately connected to their target real estate market. They have networked with the real estate professionals, contractors and other figures who know when and where properties may become available. These seasoned investors understand how reliable lead-generation works and have implemented systems that can allow for easy repetition.
How beginners can find fix-and-flip properties
Beginner fix-and-flip investors may not have an established network through which they can identify deals. Building that network is a key step towards developing a repeatable process for fix-and-flip success.
Beginning fix-and-flip investors should establish contacts with real estate agents in their target markets. A good agent should be aware of the available homes in the area that may be a good fit for fix-and-flip investing.
Wholesalers can also be a great resource for beginner fix-and-flip investors. As we discussed in our beginner's guide to fix-and-flip investing, wholesalers act as a go-between connecting would-be sellers to fix-and-flip investors. Working closely with a wholesaler (or becoming one yourself) can be an excellent way to identify potential investment properties while building your network.
In addition to these options, beginner fix-and-flip investors may want to consider foreclosure properties or properties that may have been on the market for a long time. In the right situation, both of these property categories can yield significant bargains. Be cautious, though. While foreclosed properties can be affordable for investors and often have motivated sellers, there is risk involved. And if a property has lingered in an otherwise strong market, there's probably a good reason. Adjust your expectations accordingly.
Finally, beginner fix-and-flip investors may want to explore the possibility of speaking with owners directly about their properties. Is there an obviously distressed property in your area? Do you know of an owner with a second property they no longer want or can no longer maintain? Consider making direct contact to ask about the possibility of buying it as an investment property.
When and where should you look for investment properties?
After building your strategy for identifying investment properties, determining exactly when and where to invest are your next key questions. All markets are not created equal. In 2019, some areas may be better suited for fix-and-flip investing than others. But just because a market doesn't appear to be among the most lucrative for a given year doesn't mean there's not money to be made. Evaluating a market and picking the best time to invest can still lead to good returns.
There are several key market indicators that can help you determine your investment timing. Watching your market's
overall economic strength, its population movement, and local construction trends can give you an idea of when the time may be right to buy an investment property. Similarly, keeping a close eye on foreclosure reports, inventory levels and market characteristics like school districts and crime rates can help you fill out the picture on the relative value of an investment property.
Anchor Loans can help with your next fix-and-flip investment
We're happy to work with less experienced fix-and-flip investors, as long as they meet certain conditions. The Anchor Loans Blog will always be an excellent resource to help you build a long-term investment strategy and to learn the basics needed to get approved for a fix-and-flip loan. Once you're ready to begin, Anchor Loans is happy to speak with you about the next steps of your fix-and-flip journey.
