Doing a Fix-and-Flip Remotely
All over the United States investors are working in markets that are very hot and favor the seller. Like all cycles, this one will eventually swing back in favor of the buyer. However, some markets currently have more properties that will give you the opportunity to make money now.
Let’s name a few places that properties are more abundant than where we may live. In no particular order there is Atlanta, Indianapolis, Detroit and Columbus, Ohio. All these cities offer reasonable prices and a nice inventory of homes. But, if we do not live in these cities, how do we pursue opportunities to make money doing a fix and flip in these remote cities?
The key is to start with finding a good agent. You need to communicate to your agent exactly what you are looking for in a property. Ask them the following questions:
– What price could you expect to sell the property for when the rehab is finished?
– Do you know contractors who can do this type of work?
– Have you ever invested and done this type of rehab project?
– Would you be willing to give updates on the work?
– What suggestions can you give me?
The project is going to be done long distance. It can be done successfully, but you must manage your contractors so that you finish on time and within budget. “Carrots” can be given to your agent to help you get your rehab project done. Not only will your agent make a commission on helping you buy the house, they will also make a commission on selling the house when the work is done. In exchange for going by and seeing the progress of the work, your agent will have the listing posted when the house is ready for resale.
When looking for a contractor, remember that you make money by staying on budget and on time. Put the scope of work in writing. Hold tight to budgets and deadlines. If it can fit in your budget, give the contractor, in writing, a bonus if things are on time and on or under budget. In your contract have a penalty for being over time or over budget. If you are going to do well, you need to have this phase of the work tightly under control.
If it is within budget, fly to the city your property is in. If it is not within budget, have the agent and the contractor send you photos. Keeping yourself involved is the best way to be on top of your projects. It demonstrates that you are on top of things and that you hold others to their commitments.
Your agent’s input can be valuable. Ask your agent if he or she has ever done a rehab project. Try to have your agent give some input into contractors. Being local, your agent has more than likely dealt with contractors. Your agent’s input can be very important, especially as they inform you on the progress of the property with photos and verbal reports. Get your agent on board with the idea that there is money to be made in this project for them as well as you. It may be helpful to have a bonus for the agent if things come in on time and under budget, keeping in mind the goal is to make a profit.
Success will come if the investor does his or her homework. Though it is remote investing, he or she will do all the same due diligence remotely that they would do in their own backyard. Buy at the correct price, stick to the rehab budget and schedule and sell at a profit.
You can do this. Best of luck to you!