Specializing in hard money loans here in California I naturally see a lot of fix and flip transactions. These are deals where a distressed property is purchased for less than market value, the investor rehabs the property to increase the value, give it some curb appeal and/or bring it up to snuff so it can qualify for conventional financing, then sells the property for a profit.
With the recent uptick in real estate activity, many of my real estate investors are seeing their finished properties fly off the market with multiple offers. Getting a property sold quickly is key in these transactions, as the longer the property is held the more cost is incurred with regards to debt service. At the same time, however, investors are finding it more difficult to put properties under contract with the profit potential they require. There is more competition, more bids and ultimately higher purchase prices - meaning lower profit margins.
While rehabbing homes for a profit is not a dead or dying business by any means, the successful real estate investor who intends to continue making profit on these deals is going to have to work harder, smarter or both. One way to do this is to find an excellent real estate agent to represent you.
Having an agent who is able to consistently find you undervalued or distressed properties is a valuable commodity. An agent who specializes in distressed properties and has relationships with other agents who do the same can mean the difference between getting those winning properties under contract and being frustrated at not being able to get properties under contract for the right price.
Networking is another way to work smarter. Joining a local real estate investing club and taking an active role can only help. By networking with others you will naturally form working relationships that will be beneficial in a number of ways. There are local real estate investing clubs all over, plus there are many online that you can join. Taking an active part in discussions on investing forums can also lead to good relationships and contacts.
By working smarter, the savvy real estate investor can make the real estate upturn we are currently experiencing work for them.
For information on hard money loans, rehab loans or other alternative forms of financing, please visit our home page at Acalending.com.
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