Although the pandemic cooled the housing market for several months, it has bounced back in surprising ways. Buyers are more interested than ever in getting into a great home, and the low interest rates make it even easier for them to do so. Although inventory is low, there is still a lot of potential for fix and flip investors to find success. With these tips, flippers can save time and increase the likelihood that they will succeed in this highly competitive real estate market.
Find Off-Market Deals
The pandemic environment of 2020 created an unusual situation for the housing market: extremely low inventory and the lowest mortgage interest rates ever. Flippers who are hoping to find a good deal on a rehab property should start by searching off the market. Months spent stuck indoors persuaded millions of people that their homes were simply insufficient, and that it was time to go bigger or newer. This combination means that there are plenty of people looking for homes that have the latest upgrades, but a severe shortage of properties available. Home sales are closing about two weeks faster than they did a year ago according to the National Association of Realtors, so buyers and investors have to act fast and bring plenty of capital to the table.
Research in Advance
With this backlog of demand, investors do not have a ton of time to research properties and create a rehab plan for them from scratch. Experienced fix and flip investors usually have a general plan to which they can make minor adjustments based on the home and the upgrades they want to make. Those who are new to flipping houses should plan to do this research in advance so they can hit the ground running when they acquire a property. Understanding the cost of materials, how much to order, and finding reliable suppliers who are actively working during the pandemic, can shave days or even weeks off a project.
Get Funding in Order
Part of the reason for the dramatic increase in demand for housing is the historically low interest rates of 2020 that have continued in 2021. House flippers may have more opportunities to secure funding at a low rate and increase the viability of the project. If a flipper is not in a position to pay cash, the winning tactic is to line up funding in advance in order to get ahead of the competition. Having the funding ready to go and the ability to close as quickly as possible provide a greater incentive for sellers to accept the offer. Investors can work with a hard money lender to finance their property purchase and renovation costs, allowing them to focus more on the rehab and selling of the home.
Line Up Contractors
The construction industry has been pressed in some ways and squeezed in others throughout 2020, so it is wise to identify qualified and available contractors in advance of a project. Construction has faced a labor shortage for several years, particularly in highly-skilled fields. Reliable subcontractors in these fields may be booked months in advance. Investors should start researching their options for contractors who can handle the more complicated aspects of flipping, and make sure their contacts are current. Access to a contractor could make the difference between a sale that finishes on time and one that drags on for several months extra.
Consider Building a Team
Investors must be prepared to give it their all and act quickly. Besides a reliable source of funding and contractors who can provide expert work, investors may want to build a team of people who can handle phone calls, take care of invoices, or even assist with some of the finishing touches. Multiple people working on the administration of the project saves time, helping to keep the project on or ahead of schedule.
COVID-19 made flipping houses much more complicated and competitive, which is a trend that continues into 2021. Investors can take advantage of growing demand to increase interest and profits once they sell. By following the above tips, they can minimize wasted time and keep their projects as efficient as possible while edging out the competition.
Author Bio: Eric Krattenstein’s extensive marketing experience began at a boutique marketing agency where he developed dozens of successful innovative marketing strategies for brands ranging from startups to Fortune 500s. Prior to joining Asset Based Lending in 2016, Krattenstein served as U.S. Chief Marketing Officer for a European enterprise software company where he spearheaded the company’s expansion into the United States and Canadian markets. In his current role as Chief Marketing Officer, Krattenstein leads Asset Based Lending’s Sales and Marketing team that helps upward of 40 to 50 real estate investors close hard money loans each month.