#10 Common Pitfalls to Avoid in the Fix-and-Flip Process

January 15th, 2021

Fix-and-Flip projects are generally seen as promising business opportunities that can generate quick cash profit and good return-on-investment (ROI). An entrepreneur may need to completely transform a property or simply do some tender renovations before the building is listed back on the market at a higher price.

Broadly, the process of a given Fix-and-Flip project from beginning to end can be divided into three main phases: Buy, Fix and Re-sell. Each step of the process carries certain risks therefore entrepreneurs shall execute careful evaluation of the project’s potential pitfalls.

STEP 1: Buy a Discounted/Neglected Building

The purchasing process refers to finding a neglected building at discounted price, getting it appraised and receiving financing. Firstly, you will need to find the right property for your venture. Start with connecting to local real estate agents and let them know what your criterion/budget is. It is highly recommended that you keep your eyes wide open for ad classifieds posted directly by property owners as usually this is where the hottest deals come from. A subject property should be appraised by an expert who will also determine the estimated After Repair Value of the building. Additionally, all project expenses/costs for materials, labor, taxes, insurance, interest, others have to be calculated well in advance. If you need financing, obtaining a business loan is the next thing on the agenda. Connecting with a reliable loan broker will ensure a quick approval of your loan application and smooth closing of the deal. The following mistakes should be avoided during the first step of the project:

STEP 2: Construction Works

STEP 3: Re-sell the Property

Finding the balance between doing a quality job and implementing cost efficient /time effective ways of renovating or completely transforming the building can be challenging thus proper planning and good organization of the process are critical for the success of a venture of a kind. Universal Commercial Capital is dedicated on finding a financial solution for your next project. For a free estimate or consultation, please contact us here.