Buying Your First Flip
Sep 10, 2017 / Fix and Flip
When everything is in place and you're ready to purchase your first flip - what are you looking for, and where?
1. Real estate is all about location, location, location.
Now I'm not suggesting that you should not be looking in fringe or upcoming neighborhoods as there is a great deal of money to be made in those areas, but what is the market activity in that specific neighborhood? What are the sales prices p.s.f. (per square foot)? Not the average listed price, but the actual closed price p.s.f. What is the competition? And, what is the time on the market to close?
Make sure before you write an offer that you understand the market specifics, not just in the city, but in that neighborhood specifically.
2. Buying with a real estate agent, or without?
Honestly, it doesn't matter much - what's important is that you write an offer on a property that has the highest potential, at the best price, with the least amount of risk.
The agent that you have pre-selected to work with will be gathering the facts, making a recommendation on the purchase price and potential resale value - it will be your job to review the comparable listed and sold properties provided, ensure they are specific to the property you're considering buying and neighborhood specific.
Offer price and sold value is your full and total responsibility, period.
3. Single family, condominium or income property?
It's your first flip - what are you comfortable with, and what is available? Now I would not recommend starting with an income property (more than one unit), just because we want you to get your feet wet - to have some success - to ensure your contractors are fit and reliable, etc., etc.
A single family or condominium would work, what do the numbers say? If it's a single family and your first flip - you should probably write a formal inspection into the contract, to help ensure there are no major surprises.
4. Major rehab or cosmetic.
The beautiful thing about the fix and flip business is you'll have the opportunity to say no. It's the most powerful word in the vocabulary of a fix-and-flip entrepreneur.
Don't jump into something that has structural issues, or that has been boarded up for the last dozen years... too many unknowns. And don't be in a rush to get into your first property - take your time and ensure you're entering the perfect deal, you'll know it when you see it!
If you're following the plan laid out in our "My First Flip" book you can reduce the risks of rookie errors by a large margin - there is a specific process to buying, fixing and selling fix and flip properties, follow it, and enjoy unprecedented success!
Jeff Hammerberg is a Real Estate Professional / Fix and Flip Contractor and President of FixAndFlip.com - The Nation's #1 Source for tips, products and education geared toward ensuring your success in entering the fix-and-flip business.