Fix and flip is a lucrative business for many potential investors.
As BluWav Capital we know that implies being able to generate a business process that involves the following phases:
- Locate and identify a property.
- Obtain financing to buy it.
- Generate the repair and/or rehabilitation process.
- Place it and sell it in the market.
Indeed, fix and flip is more than anything a financial product aimed at investors, builders and agents involved in the business. This implies generating different options for access to capital for the different stages of the business. From acquisition to construction, here are a few ideas that may help!
What are some relevant tips to starting a fix and flip:
The main financial products that are counted for this type of business are:
- Fix and flip line of credit.
- Individual loans.
- Financing for new construction.
Considering that, here are 5 tips to build a solid f&f business!
Experience is key to getting investment financing for your business. An experience that can be tested through documents, of course!
When you do not certify experience, the financing conditions will be tougher. Being able to obtain financing of up to 70% of the value of the property you want to buy. And 95% of the value for repair!
If you certify an experience of between 1 and 2 successful businesses, you can obtain financing of up to 70% of the purchase value. In addition, up to 95% of the repair value!
Indeed, should you be able to certify an experience of 3 or more closings, you can get financing of up to 90% of the acquisition value and 100% of the repair value. That’s a great thing!
It’s all about the team
In this line of business, the speed with which the business is done is very important. Therefore, it is important to have a team designed so that all phases of the business work properly.
This team should normally be made up of:
- Lawyers for contracts and titles.
- Real estate agent (Real Estate) to market and sell.
- Construction: for repair.
- Mortgage: Prequalification and buyers.
If you don’t know where to start with that, our team at BluWav Capital can help!
Credit building for your fix and flip
An important factor if you want to grow in this business is that you know how to take care of your personal credit and that you learn to build commercial credit. In the case of personal credit, the points that you must take into account are:
- FICO SCORE: Worry about having your FICO SCORE as good as possible, from 640 you can have financing options. Remember, the higher your credit score is, the better financing conditions you will have.
- Have no bankruptcy proceedings in the last 3 years.
- You are not owing taxes in the last 3 years.
- Do not have lawsuits pending resolution.
The type of property
Another key in the fix and flip business is the type of property with which the business is going to be done.
Normally these are some key points: they should not be inhabited by the owner, and the location is crucial. Keep that in mind!
Have an exit strategy for your fix and flip
In the fix and flip business, it is essential to have a clear exit strategy at the time of acquiring the property.
What is the exit strategy? Well, it is to be clear about the cost of repair, the repair time and how much is the resale amount. At the same time, to be clear about the type of buyer you are interested in knowing about the property.
If you need further guidance with this type of business, contact us. Our team of experts will be thrilled to help!
MarkSeptember 6, 2022 1:51 pm
Thanks for your blog, nice to read. Do not stop.