When you break the whole process down it comes to the following four stages, which we will call the four F’s,
Finances
Finding a Property
Fixing
Flipping
The stages are not necessarily in the order they always happen and you may not even have to go through all of the stages. We have found properties that are absolute gems, but we did not have money in place to purchase them. This left us in the position where we put offers on before getting our finances in place, or we would lose them. This adds a considerable amount of stress and is not a recommended strategy for the beginner.
One property we found required no work, the owners just needed out quickly and they provided us with a portion of their equity allowing us to move directly to the flipping stage. We bypassed the fixing stage entirely.
We have also had multiple situations where we have even placed offers on properties with extended possession dates, early access and the right to sell the property before our original deal closes. This has allowed us to skip the entire financing stage, although we did have to come up with the initial purchase deposit and the renovation money. This has worked out perfectly several times, while other deals we have had to go back to the sellers and negotiate an extension to the close date. Alas, this too does not always work, as we did have to get financing on one property. Guess you cannot win them all!
The point being, use these stages as a guideline, not hard and fast rules. If you move forward and begin flipping properties on your own hopefully, you will have plenty of time to arrange financing. Have weeks to evaluate the budgets and numbers to ensure a property will be profitable. Will have crews begging to work for you and get the job done as quickly as possible and then your beautiful masterpiece sells at the very first Open House.
Of course, in the real world financing falls through, it can take months to find a property that works, but then you find three that are all ideal at once, the contractors you line up suddenly cannot commit, and your property doesn’t sell for months. That is all part of the game though and being able to deal with all of the hiccups along the way makes you more prepared for the next property. Remember it isn’t if you have hiccups, it is when. Next week we will break down the Financing stage, if you have any comments in the meantime, please let us know.
