9 Ways To Save Money On Fix And Flip Repairs

The success of a fix and flip investment depends entirely on your ability to sell the rehabbed property at a price that not only recuperates your total investment but also leaves you with a profit. However, if you’re new to the real estate business, it’s all too easy to spend more than necessary on fix and flip repairs —and that can drastically reduce the amount of money you can make. Avoid that mistake by keeping the following eight tips in mind:Fix and Flip1. Stick to your budgetAssuming you used financing to purchase the property, you’ll have allocated a portion of the loan or secured additional funds to cover the costs of fix and flip repairs. That sum should be based on the pre-purchase home inspection, as well as a contractor’s assessment of the work that needs to be done and the costs of labor and materials involved. If you use this assessment as a benchmark for each part of the rehab project, you’ll avoid going over budget.2. Know what things should costYou should have a general idea of the cost of plumbing, electrical, roofing, siding, painting, and flooring projects BEFORE you get prices from contractors and BEFORE you submit an offer on a project.3. Use subcontractorsSubcontractors’ rates can be as much as 10 percent lower than contractors’ rates. Make sure to hire subcontractors who are licensed, insured, and come well recommended. In addition, draw up an agreement in writing that clearly delineates each party’s rights and responsibilities.4. Save on materialsAlways handle the ordering, purchasing, and picking up of materials yourself. If you let your subcontractors do this, it can cost thousands in extra time, plus, they’re unlikely to do the footwork to keep costs as low as possible. Also, utilize all delivery and pricing assistance that your vendors offer.5. Special OffersLook for special offers, loyalty savings, and member or seasonal discounts at regular hardware stores. You can also get volume discounts if you buy at large-scale suppliers.6. Shop at OutletsOne way to pay much less for high-end materials is to shop at outlets for anything from paint to carpet to appliances. Since they mainly sell remnants, you can get significant discounts on anything from hardwood flooring to stainless steel appliances.7. Salvage YardsFinally, don’t forget to visit architectural salvage yards to find unique items that add a touch of character to a home, such as ornate fireplaces, stained glass windows, and antique doors.8. RefurbishNot everything that’s broken, scratched, or dated needs to be replaced. Refurbishing can be a cost-effective alternative with often surprisingly good results. Think of painting dated kitchen cabinets and replacing the handles; re-using wood from old doors for wide window seats or yard furniture; and having the enamel on sinks, toilets, bathtubs, and showers refinished.9. Get hands-onThe costs of labor are high, so fix and flip repairs you can do yourself saves money.Moreover, when you’re at the property, the contractors can come to you directly if they run into problems, which can help prevent delays.If you keep these nine tips in mind, you can greatly increase your chances of not only staying within your budget but even finishing below it—and that in turn will increase your profit when you sell the property. And with all the money you’ll save and earn, you can start looking for your next fix and flip opportunity.

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Flip & Hold Funding is New England’s premier provider of private capital. Because of our knowledge and expertise, being proven investors ourselves, we provide our investors with low-risk, high-yield asset-backed commercial investments. Flip & Hold has a long-standing track record of providing impressive returns for its investors.

Proven Success

Flip and Hold Funding's team of local industry experts has over 25 years of combined experience in investing, lending and borrowing. Prior to forming Flip &Hold Funding, the principals were owners, investors, and developers of real estate ranging from condos and single-family homes to massive residential multifamily, and commercial projects. We are proud to mention that Flip & Hold’s principals actively invest their own capital into Flip & Hold Funding's projects alongside its investors.

Security

All investments through Flip & Hold Funding are secured by a first position of Real Estate. All loans go through extensive underwriting and meet our proven criteria for success. Flip & Hold also backs each loan, which significantly reduces the risk of investors as Flip & Hold Funding will not lend on a deal that we would not feel comfortable owning.

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What Is A Hard Money Loan?

For a commercial hard money loan, the lending decision is based on the “commercial asset” as opposed to relying heavily on a borrower’s credit, financials, etc…Although most hard/private money lenders will want to see some financials, tax returns, and credit, the overall decision is based on the quality of the deal not the financials of the borrower. Buyer be warned though that hard/private money lenders do look at those things like credit, financials, experience, etc and those factors can determine what rate/terms are offered.The term “hard money“ comes from the fact that a loan will be secured by a real, tangible asset. More often than not, this asset will be in the form of real estate. In that sense, a hard money loan is generally a short-term, higher-interest funding opportunity that needs to be effectively handled and managed. Seasoned real estate investors use hard money as a “tool” in their borrowing tool belt, knowing that it is much cheaper to use hard money than to take on an equity partner. It is also much safer to use other people’s money and keep yours for emergencies. As long as you can factor the costs into the deal and the numbers still work, private money is a very viable option for investors of all levels.Essentially, a hard money lender is any company or person that has extra money to lend. Although there are many unique circumstances regarding the terms and conditions of a hard money loan, put simply, hard money lenders will not offer a large cash amount without the borrower having specific assets, such as a home or property they can use as collateral. Typically the private/hard money lender will take “first position” on the note and offer you a mortgage as a traditional bank would.After you approach a hard money lender, they will then calculate the loan-to-value ratio. The higher this ratio, the more difficult it can be to obtain a loan. For example, say you require $50,000 in order to make a $90,000 investment. Your ratio will be $50,000/$90,000 x 100, which equals 55.6 percent. To the lender, this means that they will need to lend you 55.6 percent of the total cost. This is a very important point to mention; ask what LTV (loan to value) the lender will go up to. Most want to be in the 55-65% range, but here at Flip & Hold Funding, we will go higher to the 70-75% LTV range, giving our borrowers more capital, using less of their cash so they can do more deals!How Can Hard Money Lenders help you?For starters, these loans are often given out very quickly — typically within 15-30 days. When compared to an average of 45 to over 60 days when borrowing from a bank, this turnover time is very attractive. If you need cash fast, this approach can be an optimal choice, especially in terms of investment opportunities.Unlike when you borrow from traditional lenders, you can typically get a loan without as many regulations and limitations. With that being said, hard money loans are not typically the best idea in relation to long-term investments. If you need to make an initial purchase or would like to make a fast investment, then this is when you should consider a hard money loan. Typical Hard / Private Money loans have terms of 6-12 months. If you will need longer than that, there are renewal fees and points could be charged, so on those longer loans, private/hard money may not be the best option.As long as you use a hard money loan properly, in addition to ensuring due diligence throughout the lending process, this option can provide you with a great business opportunity. Don’t be shy to ask a question and really get involved, understanding the full conditions of your agreement. Hard money loans can be highly beneficial across various situations. While these loans are not ideal for every borrower and every situation, when used properly, they can help you make excellent returns on your small business ventures and investments.Give the experts at Flip & Hold Funding a call to discuss further!

How To Get Started Investing In Real Estate

To succeed in real estate, you need proper knowledge about investing. Often new investors fail because they do not know how to invest properly. Fortunately, the advice in this article will help you get started. If you’re thinking about investing in real estate, you do not want to miss out on this article.Learn about real estate before investing money in it. The important part is to gather all the advice and tips that work well in the business. You can buy some educational DVDs, google some “how-to” articles online, but the real way to learn the dos and don’ts is to speak to a trusted partner like Flip & Hold Funding who can guide you to start to finish securing your first deal. You definitely want to do A LOT of research before you begin.Think carefully.Flipping real estate properties might be something that works best for you. Or, maybe you like the challenge of rehab projects where you rebuild from scratch. Further, you may like the steady revenue stream that comes with owning multifamily rental units. Each specialty requires a different skillset, so focus on what you really like and what you’re good at. A seasoned investor has a mix of properties in their portfolio to help balance risk and to provide protection from market changes.Get a feel for the values of properties near yours.Rent and mortgages in the local neighborhood can give you a much better feel of the value of a house than financial statements. Once you have a good understanding of the street-level conditions, you can make wiser decisions. Be the expert on values in the town or towns that you are interested in. Know prices differences based on sq footage, # of bedrooms, # of bathrooms, by street, and neighborhood. You want to find comps within .5 miles from the subject property.Know your ARV!ARV refers to After Repaired Value and that is the key to success. If you know what you will have to pay for a property, and know how much it needs in repairs, and know what the conservative ARV is, you probably won’t lose! Some people think that you cannot make money in lower-end neighborhoods, and boy they are mistaken! Many investors make huge profits buying in lower-end neighborhoods as that is where you will find more first-time home buyers. We do deals in high-end neighborhoods and we also do deals in lower-end neighborhoods and love them both! The bottom line is if that you know your numbers, comps, and ARV, you can make money in ANY Neighborhood.Be careful about buying houses that have issues that you cannot control.Steer clear or be VERY careful of making purchases in houses that have things that cannot be fixed without huge costs. Low ceilings, industrial neighborhoods, functional deficiencies, are just a few of the things that you need to factor into your deal if you want to be successful. Anything can be fixed but a what cost. We once did an awesome flip in a “higher-end” town but due to it being located in a kind of commercial/industrial neighborhood, we couldn’t sell it for the longest time. We finally did sell it maybe for a loss, so learn from our mistakes, you can’t pick up a house and move it! Well, you can but it costs a lot of money. This is just one example of “issues that you cannot control”.Be Professional.Successful investors run their real estate businesses like real businesses. Think about employing a professional property manager if you are buying multifamily tenant buildings. Use legitimate contractors that are licensed and have insurance to do the work. Pull Permits! Although it can be attractive to cut corners initially, you ALWAYS pay for it in the end. Also, even if you are doing the work (labor) or some it yourself, factor the cost in of someone else doing the work when you are analyzing the deal.Having access to capital / both liquid and institutional.You never want your investments in real estate to start draining your liquid cash reserve. Investing in real estate means investing money that you can’t get back right away. Make sure that your day-to-day life does not get choked up from this. That is why even seasoned investors who have large amounts of their own cash on hand still use other people’s money. Emergencies come up, you DO NOT want to be handcuffed or cash poor because you were too frugal in your decision to use outside capital. Smart investors always use other people’s money and factor those costs into the deal. If you have a lot of cash sitting in a bank, possibly only fund the purchase price with a lending source and pay the fix-up/renovation amount in cash. That way you use some of your liquid cash but not all or most of it.Call or email us today!You now are equipped with some great advice pertaining to making it as a real estate investor. In order to experience success, you need to apply what you’ve just read and keep learning all you can. The more you learn about it, the better you become at investing in real estate. Please call, email, or go onto our website today so we can connect with you and show you how to begin or advance your career as a real estate investor!Good Luck!