People who are new to house flipping often underestimate just how much it will cost to remodel the home that they have purchased. This common beginner mistake can take a major chunk out of the return on your investment. Here are a few things to keep in mind when calculating your remodeling costs and determining exactly how big of a residential rehab loan you’ll need to take out.
1. Consider ROI first and foremost
When looking at a potential investment property, you’ll want to not only consider what you think your overall ROI will be, but also the ROI of your individual repairs. It’s always a good idea to renovate houses in a neutral design manner, but beyond this common sense move, you’ll also want to research which renovations will give you the most bang for your buck. For example, solar panels on the roof may seem like a great idea, but you won’t see a significant return on your investment in the short term.
2. Time is money
When considering the cost of your remodel, it’s essential that you factor in the time that your planned repairs will take. The old adage that “time is money” is absolutely true. The longer it takes to complete your remodel, the more you’ll spend on labor, and the more your profit will drop.
3. Choose a contractor that you trust
Perhaps some of the most important research that you will do when rehabbing a house is choosing a great contractor. Choose someone who has experience rehabbing homes and can provide you with solid advice regarding design decisions, cost-effective materials, and the ROI of specific repairs. Shop around for contractors with great reputations, not just low quotes.
4. Work with a rehab loan lender who is on your side
Rehab loans can give you the capital you need to get started, but a great lender can give you the advice and guidance that you need to finish. The right lender can help you research ideal investment opportunities, provide you with sound advice regarding how to most effectively flip the property, and provide you with the residential rehab loans that you need to get the job done.
At Zinc Financial, our team enjoys working with new and experienced house flippers who are as passionate about what they do as we are. Zinc Financial offers a level of reliability, service, and speed that simply can’t be matched by other lenders. Give us a call at (888) 552-6637 today to learn more about our loan programs or to find out how we can help you get started with your house flipping goals.