Sunday, July 27, 2014

How I Funded, Fixed And Flipped 6 Real Estate Investment Properties

How I was assured that I would make the most  out of my Flips was in thinking backwards. What I mean by thinking backwards is, I asked the real estate agent, before I purchased the property, what would we need to do to the property, we were considering to Flip, in order to get the best return on my investment.


Before I choose a house to flip, I always invited my interior designer and my real estate agent  to do a walk through with me through some potential houses to flip. These houses were selected following my criteria of location and purchase price.

I did all of this research before I put in an offer to purchase. At the time of the walk through I discussed  with my interior designer and real estate agent, the property’s challenges and what needed to be done in order to sell and get a good return on my investment flip.
I was only doing the lipstick and rouge routine, not getting into the heavies of moving walls, changing plumbing, or upgrading the electrical panel.

In my mind, it didn’t make sense getting my agent involved after I completed the flip.,  If I got the agent involved after I completed the flip, I may not have addressed issues, that I could have caught during the time I was working on the flip.

So I got my interior designer and real estate agent involved, doing walk throughs  on a weekly basis as the flip progressed, that way mistakes could be caught early and this method is less costly to the bottom line.

Fix & Flip Investment Strategy 
The 5 properties that I flipped in the past 10 months were single family homes ranging  in price from $150,000.00- $450,000.00.  They were located in Ontario, Canada. The houses I purchased were good properties, in stable neighborhoods.

My strategy was to find properties in up and coming areas, where I could rent, sell or Fix and Flip, these properties, to a diverse  portfolio of tenants, that ranged from students, singles, families, and couples.

My strategy was to buy houses in a diverse stable market place  and that way it would be easier to sell to a diverse purchaser.  I had my outgoing strategy ready before I purchased the properties and making that decision at the time of purchase,  determined whether I bought or not in a certain area.

Fix & Flip Funding and Financing Strategy

 I purchased the houses using bank financing and getting 2nd  private mortgage holders, or I self financed my second mortgages.
I picked up or had supplies delivered daily and had a line of credit at the hardware store.  I paid the subcontractors on a weekly  basis once I approved their work. I funded all the work on the Fix and Flips myself and worked with a very tight financial budget.

Fix & Flip Rehab Work Involved 
I was the general contractor on all of these projects and  subcontracted work out  to other trades, I chose a female painter to do the painting.  I found that she was better at taking care of the fine painting details, helping me choose colors and then painting with colors that would appeal to the female buyer.

The Fix and Flips consisted of focusing the work around kitchens and bathroom, changing faucets, toilets and counter tops.  We completely changed out flooring with either laminate or carpet.
Painting, and cleaning the inside of the flips and landscaping the outside, so that there was curb appeal.  The flips could take from 4-6 weeks depending on what was required.

Once on the market the average turnover of the Flips from was 2-4 months from starting the work on the Flip to selling the Flip.

I would say that the hardest thing  to do with the Flip was to find and keep contractors.  I was fortunate that I had the same Flip team for 4 out of  the 5 flips.

Most Important Things I Learned Flipping
What I learned from my Fix and Flips, is that this type of real estate investing requires experience, effort, energy, sticking to a budget and a strict time line and of course not forgetting, hard work and capital money to complete the flips.

The process of flipping houses is not for the light of heart, even with these simple flips, the biggest concern was in the timing of doing a flip, and the more critical key was budget costs of the jobs. The timing and costing of each project was very important to making a profit.

Timing and finding the right house below market value is the best way of finding a good house to flip. The other thing I learned was that I needed to be on site everyday.  You can’t leave the responsibility of your flip to other people.

Contractors don’t  take the same amount of interest or initiative as the owner does.  Which makes flipping time consuming, you can’t delegate to other people without checking to make sure that they follow through with what was agreed beforehand.

Fix & Flip Profit Strategy
The profit that an investor can make can range from $20,000 and up in profit per property.  From the profit, there are expenses that need to taken out. Expenses such as the real estate fees, legal and carrying costs.

One rule to follow on Flipping real estate is, that if you can make as much money, or more money, from a flip, that you would have made holding, and  renting the property out for one year, then you have done well financially. You can consider your flip a success.

My  real estate exit strategy is to continue to  buy and flip houses, bank the money from the flips to purchase other properties to both flip for a quick return, and to invest in long term real estate to build equity.

As an experienced buy and hold investor I plan on adding Fix and Flips as part of my investing portfolio and hope to write about more successes soon.

Happy Investing,
Maria Rekrut
Bio: Maria Rekrut, a Canadian investor, has been investing in real estate since 2000  in Ontario, Canada. Her diverse real estate portfolio includes: Rent to own homes, student rentals, family homes, executive homes, executive bachelor suites, cottage rentals, Vacation homes, and a Bed & Breakfast. Her strategy has been to purchase good properties in stable neighborhoods, and hold them long term. She has diversified her portfolio over the past year to include properties to fix and flip.
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