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Fix and Flip Mortgage Deals

“Fix and Flip” Deals

Investors in real estate make mega bucks by using the “Fix and flip” routine. Quite simply “fix and flip” refers to a three step procedure in handling real estate deals. Buy—renovate—sell for profit. In the basic “fix and flip” scenario, you buy a house, fix it up, and then sell it immediately for profit. Profit means your selling price must be higher than your buying price and the cost of renovation put together.

So, what happens to the investment if there’s a slump in the market? Some investors can lose out on the “flip” in a slowing market. However, with some smart thinking, there are always ways to make money with “fix and flip” in any kind of real estate market.

Estimate “Fixing” costs accurately

One of the key elements of your “fix and flip” profit will depend on an accurate estimation of what it will cost you to renovate the house. Renovation projects typically run over the schedules and over the budget. So keep a generous margin of safety while budgeting.

Estimate “Flip” time accurately

The other key element to assess is the condition of the real estate market. You can make money by “fix and flip” even in a slowing market as long as you can hold on to the property for a while. Remember not to set yourself very restrictive timelines for selling the house. If you can hold on long enough, you will end up with a profit.

Lease with option to buy

In this case, you’ll amend the typical “fix and flip” so you lease the property with an option to buy. Obviously, it’s important to ensure that your monthly mortgage payment is being covered by the rent accrual. At the time of selling, you don’t have to pay any brokerage fees to a real estate agent since your renter is your automatic buyer also.

Many lenders will be able to help you finance a “fix and flip” property. These offers typically finance both the buying price and the funds required for renovations. But making money on the deal is your baby. If you have accurate cost and time estimates, the returns can be well worth the effort!

 

 

 

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