Successful Fix and Flip Investing - The Importance of a Team

I specialize in hard money lending.  These days I am working with a lot of investors who are flipping houses for a living.  These fix and flip investors come in all shapes and sizes, from the experienced with many closings each month to the new investors with little to no experience and little to no money to work with.  One common theme I see with regards to the successful investors is that they have a quality team that is accurate, professional and efficient.

There are two main reasons that I see for most failures in these fix and flip transactions.  One is the over estimation of the after repair value of the property.  The other is the under estimation of the cost of rehab.  Both of these issues can be resolved, however, by ensuring that you have qualified team members working on your behalf.

The first issue often times stems from inexperience.  As a finance professional, I see the upfront numbers and I look at the comps to see if there is support for the after repair value being used.  Sometimes it is easy to see that inflated numbers are being used, but other times it is less cut and dry.  While I can look at comps, I do business all over the state of California and there is no way for me to know the intimate details of every neighborhood in the state.  This is where having a quality real estate agent comes into play.

Having an experienced agent who knows the neighborhood and is able to give an accurate representation of what a property is truly going to sell for after repairs are done and it is given some curb appeal is essential.  This number is the basis of the whole transaction, and if this number is not accurate then there is a good chance no money will be made.  This is especially true as the margins get thinner due to less inventory of distressed sales and more competition between investors.

The second issue is a little more tricky.  Getting a property inspection done is one way to help ensure that you know what needs to be fixed upfront.  Having a quality contractor who you trust is another way.  Ensuring you have accurate numbers with regards to the cost to repair and get the property ready for sale is essential.  For more information, please read my full Successful Real Estate Investing blog post.