Top 8 things to consider when planning a flip/rehab

The successful investors that I have worked with all have certain traits in common. While they may be fundamentally different in the kinds of properties they look to acquire and their overall investment strategy, they all seem to have clear and consistent goals, are meticulously organized, and possess entrepreneurial optimism. With all that being said, below are the most common things to consider when planning a flip/rehab project.

1) How well do I know the neighborhood- Is it in transition? Is there a history of illegal activity in the area? Are other properties being renovated? 

2} What is the proximity to major employment centers? What is driving the neighborhood transitioning? Is it close to jobs? Major commuter routes? 

3) What is the inventory in the area? Are they selling quickly? What improvements seem to be selling? What have the last three properties sold for- pre and post reno?

4) Are there new projects planned for the local area? New or improved retail, restaurants, hospitals, road improvements, etc. All can be a pre-cursor to an area taking off.

5) Do I understand the structural condition of the property? Sometimes investors think they have cosmetic changes to make in a property when major structural issues exist. It is very critical to have a good structural engineer as part of your team.

6) How much will this cost me to renovate and how long will it take? Make sure you assemble a list a good contractors that are local to the area and are reliable. Managing your budget and timeline effectively is one of the most critical elements of maintaining profitability..

7) What is my out sale strategy? Make sure you assemble the right real estate team that can create momentum and traffic for property. The right real estate group that understand the local area can help guide you through which features add value to the sales price and can also create energy, excitement, and traffic for your property.

8) What is my finance team? Your finance team should be comprised realistically of two different teams. One team will manage the acquisition and renovation loans for the property. This group may be a private lender or local portfolio bank. The second group should be a conventional mortgage company that offers the permanent loan for your buyer. If your lender provides the permanent loan it gives you more control of that process and you can be informed of any issues with qualification early enough during the process that you can plan accordingly.