Investment Strategy - Buy, Value-Add, Sell for Profit
Classic Fix and Flip - Buy a property, fix it up and sell it
Buy a Property (with Cash or Commercial Financing)
You make money on the purchase! It is extremely important for us and our investors that we purchase deals that will extend a return. We underwrite our properties at least three times using different models to ensure that we will not be stuck with money in the deal at the end of the whole transaction.
Example: We will buy a distressed property for $75K cash and assume with our remodel budget of $25K will provide us with an after repair value (ARV) of $200K
Remodel the Property
Know your market. We will not put marble shower surrounds in a working class (Class C) neighborhood but we might in a high end (Class A or B) neighborhood. We make sure that the finishes are the highest value added expectations for the "high-end" in that given demographic.
Our preferred finishes are wood-look luxury vinyl plank flooring, shaker cabinets w/solid surface countertops, tile surround tubs/showers, and stainless or black appliances.
Example: from the house above, we met our remodel budget of $25K and are now "all-in" at $100K with a home that is "worth" $200K in the current market. We now have two choices - Sell it (Flip it) or do a Cash-out Refinance.
Important Note - know if you are targeting Investor or Retail buyers! The investor might not care that the house looks like HGTV, the retail buyer might. Having multiple quick exit strategies is important.
Sell the Property for Profit
We have multiple avenues for real estate sales on market, off market or through wholesalers
Example: Our property is listed for sale for $200K & appraises for $200K then sells for asking price.
The end state: ~$85K profit ($100K minus any transaction/agent fees)