Property flippers across the United States are generating revenue by revitalizing homes and entire communities. However, no two property markets are alike, and property flippers need to maximize their profit margins on fix and flip projects. There are two main strategies property flippers can implement to get the most out of their investments, regardless of market pressures.
Fix and Flip
Most people are familiar with fix and flip strategies on some level. Commercial real estate investors will purchase an abandoned or older property at a low price, make renovations to attract potential home buyers, and then make a sale for a profit. When the Great Recession hit in 2008, a large number of home owners left their properties, and no one has inhabited them since. This situation has given property flippers many opportunities to renovate homes and generate revenue from sales. There are more homes out there in need of renovations than there are newly constructed residential properties, so property investors have made life-long careers as property flippers. As evidenced by television shows, podcasts, and other media, the fix and flip industry is running strong, especially as more people are looking to buy starter and forever homes.
Fix and Rent
What happens when the property market is experiencing downward pressure? Similarly, what happens when property prices are stagnant as a given area waits to larger developments to move into the area? Property flippers typically lose money if they try to sell a property in these market climates. At the same time, simply holding onto a property is not generating any revenue. Under these conditions, property flippers employ a fix and rent strategy. Fix and rent projects are just like regular property flips, but instead of trying to sell at a loss, property flippers will rent out those homes to tenants. The revenue generated is split between paying off the mortgage and profit. Then, when the market is on an upward trajectory, the property can be sold with an even greater profit margin.
If you are a property flipper and need financing tailored to your next or current project, contact the team at Golden Century Lending and as about our fix and flip financing solutions.