Many of my borrowers or potential borrowers that are new to investing ask me for tips on how they can try and avoid their rehab becoming a nightmare. Here are my top 5:
- Do not put all your money in 1 deal!! Have you ever heard the saying “don’t put all your eggs in one basket”? I get so many calls where potential investors are trying to figure out on a 2 minute call how much they will need to the penny to get into a deal, pay for the appraisal and try and close. If this deal goes bad where does that leave you?
- Never ever use Zillow or any other online site to determine your ARV on a property. Most of the time these values are not even close. Your time would be better served walking the property with a realtor or getting a local appraiser to do a desktop appraisal if your looking for a quick valuation. These online values could be off by as much as 8-10%.
- Square blocks don’t fit in round holes. What does that mean? You find a property you are in love with but the numbers just don’t work. You try your hardest to make the numbers on that property work because you just can’t give up on the deal. Never change the numbers on a deal just because it’s a property you have to have. Not every property is a deal and if the numbers don’t work, they don’t work. Move on.
- If you are not a contractor make sure you hire one! Do you do your own surgery, your own dental work, how about if you were getting divorced would you represent yourself or hire a divorce Attorney? If your flip requires some work – electric, plumbing, roofing or HVAC to name a few, why take the risk doing it yourself? It could turn out more costly in the long run if you do things wrong. Hire the appropriate licensed and insured professional. It might cost a little more from the get go, but how much will it cost if you try and do it yourself and then have to hire someone to redo your work?
- Always have an exit strategy! Never walk into a deal without a solid plan on how you will either get your money or your investor’s money out of that deal. Will you sell, refinance, sell the property with owner financing? Make sure you have a well thought out plan on how to end your project.
These 5 tips should be your basis on any deal you do!
NLDS Corp is a leading hard money lender in most states lending to rehabbers, builders, investors and commercial property owners. If you have a deal for us to look at submit your loan application here.