FIX & FLIPS IN DENVER

Glamorized and made popular by HGTV shows, the fix & flip is a well-known real estate investing strategy, but it’s not for the faint of heart!

If you’re going to become a flipper you’ll have to get comfortable with the idea of buying dilapidated buildings, hoarder houses or otherwise neglected homes. But, for those who master the flip it can serve you well as a means to financial independence.

The Benefits of a Fix & Flip

Why the heck would anyone do this? Let’s take a look at some of the benefits below:

Potential for High Profits - When done correctly fix & flips can earn investors a significatn return on their investment. A successful flip starts with buying a distressed property at a low price, making necessary renovations and improvements and then selling it for a higher price.
Short-term Investment - Unlike some real estate investment strategies that require a long-term holding period, fix and flips typically involve a shorter time frame. This means that investors can quickly turn over their investment and move on to the next project.
Flexibility - Fix and flips offer a flexible investment strategy. Investors can choose to do as many or as few projects as they want, depending on their financial goals and available resources.

Boosts Local Housing Market - By fixing up distressed properties, investors can help improve the overall quality of housing in a community. This can have a positive impact on property values in the surrounding area, benefiting both the investor and the community.
Ability to Leverage Financing - Investors can use financing to fund their projects, which can allow them to purchase and renovate more properties than they could with their own cash. This can increase the potential for profits and provide a more significant return on investment.
Learning Opportunity - Through the process of buying, renovating and selling a property, investors can gain valuable knowledge and skills.

The Drawbacks and Risks to Flix & Flips:

Renovation Cost Risk – Renovating a property can be expensive, and unexpected issues can arise during the renovation process, such as hidden damage or unforeseen repairs. These additional expenses can impact your expected profitability.
Property Holding Cost Risks - Holding a property for an extended period of time can result in additional expenses

Financing Risk – Borrowing money to finance a fix & flip project comes with the risk of interest rates changes, and defaulting on the loan can result in foreclosure and loss of the property.
Contractor Risk - Working with contractors comes with the risk of subpar workmanship, delays and cost overruns. If you're not doing the work yourself, your beholden to the talent and integrity of others.

FIX & FLIPS CASE STUDY

Denver - Up /Down Duplex

4 Bed | 2 Bath
2,100 sq/ft
Purchase Price: $47,000
Cash Flow: $1,320/month
CoC Return: 39.55%
NWROI: 121.07%

How to Find a Fix & Flip in Denver

Typically, a fix & flip isn’t found on the MLS (multi-listing services) and they are definitely not found on Zillow or Trulia. The two best ways to find a distressed property is to either attend foreclosure auctions or work closely with a real estate agent who has access to off-market deals, like a FI Team agent.

Foreclosure Auctions

Similar to any auction you’d attend the house goes up for auction, people place bids and the highest bid wins. Before going to an auction you should prepare yourself.

1. Get your finances in order – most auctions will only accept cash, cashiers checks or money orders and you will need proof of funds prior to bidding.

2. Be prepared to buy sight unseen – unlike purchasing property the traditional way with time to look over the home or have a professional inspection, you’ll likely be buying the home sight unseen. You should try to do a drive by of the property prior to the auction. Take in clues of the upkeep of the exterior, the overall neighborhood and possibly peek in the windows if it’s uninhabited.

3. Expect the unexpected – you get what you get at a foreclosure.

Partnering With an Agent

Realtors can save you time and money finding you the right property for a flip. Working with a realtor can also reduce your risk of a flop because they can provide their expertise on what properties will likely have the best return on investment. Partnering with an agent is loaded with other benefits:

1. Access to off-market properties – realtors often have access to properties that are not listed on public websites or the MLS. This means they can present investors with more opportunities to find distressed properties suitable for your project. Join The FI Team off-market deal list to learn about deals when our clients do.

2. Trusted referral network – a realtor who works with flips can provide recommendations to other professionals who can assist with the fix and flip process, such as contractors, home inspectors and lenders. C heck out The FI Team’s list of preferred Denver vendors.

3. Negotiation skills – realtors can negotiate on behalf of their clients to help them secure a property at the best possible price. They can also assist with negotiating contracts and other legal documents to ensure that the investor’s interests are protected.

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