Fix and Flip of property at Onate
Fix and flip is a property investment strategy that involves purchasing properties, renovating them, and selling them for a profit. This approach can be highly lucrative if done correctly but also comes with its share of risks. Successful fix and flip projects require careful planning, a keen eye for potential, and a good understanding of the real estate market. At Onate, we have funded numerous Fix and Flip projects over the past number of years.
Why Fix and Flip?
Profit Potential: The primary motivation for fix and flip is the potential for high returns. Investors can make significant profits by purchasing undervalued properties, improving them, and selling at a higher price.
Market Demand: There is always a demand for well-renovated homes and investment properties, especially in areas of high rental demand. Home owners and investors are often willing to pay a premium to purchase newly refurbished properties.
Creative Outlet: For those with a passion for design and renovation, fix and flip offers a creative outlet to transform outdated or derelict properties back into the housing supply market.
Steps to a Successful Fix and Flip
Research and Planning
Market Analysis: Understand the local property market and look for comparable properties to understand values and be disciplined about the purchase of properties. Identify areas with high demand and potential for appreciation.
Budgeting: Determine your budget, including the purchase price, renovation costs, holding costs, and contingency funds
Financing: At Onate, we support these types of projects by providing up to 75% of the purchase price depending on the location and up to 100% of the refurbishment costs depending on the estimated completed value of the property.
Property Acquisition
Finding Properties: Look for properties through online property listings, property auctions (such as BIDX1), real estate agents and networking. Often off market transactions are where added value can be achieved. They are not for everyone, but there are promoters who will advertise locally for potential sellers, door knock and use leaflet drops to generate leads for properties.
Due Diligence: Conduct thorough inspections to assess the condition of the property and estimate renovation costs.
Renovation
Planning: Develop a detailed renovation plan, including timelines and cost estimates. Identify renovation projects that don’t require planning permission which can be costly and create time delays.
Hiring Contractors: Find reliable contractors with experience in renovation projects. Get multiple quotes and check references, recommendations are invaluable to help with identifying the right refurbishment/renovation partner.
Project Management: Oversee the renovation process, ensuring it stays on schedule and within budget.
Selling the Property
Staging and Marketing: Stage the property to enhance its appeal. Use professional photography and list the property on popular real estate platforms.
Pricing: Set a competitive price based on comparable sales in the area.
Negotiation and Closing: Be prepared to negotiate with buyers and navigate the closing process smoothly.
Common Challenges and How to Overcome Them
Underestimating Costs: Always add a buffer to your budget for unexpected expenses.
Overestimating Market Value: Use conservative estimates when determining the post completion work value of the property.
Delays in Renovation: Plan for potential delays and have a backup plan to mitigate them.
Tips for Success
Build a Strong Team: Surround yourself with reliable contractors, real estate agents, and financial advisors.
Stay Informed: Keep up with the property market trends and new renovation techniques.
Focus on High-ROI Improvements: Prioritise renovations that add the most value, such as kitchens, bathrooms, and curb appeal.
Network: Build relationships with other investors, contractors, and real estate professionals to find opportunities and gain insights.
Fix and flip can be a rewarding investment strategy when approached with careful planning and execution. By understanding the market, managing costs, and making smart renovation choices, you can turn undervalued properties into profitable investments. Whether you are a seasoned investor or just starting, the fix and flip market offers numerous opportunities to grow your wealth and increase the housing stock with properties that may be derelict for some time.
Contact Onate today if we can assist you with your Fix and Flip project.
Reach out to John Ring at john@onate.com / 087 830 5276, Michael Gavin at michael@onate.com / 085 145 4200 or Niall Hurson at niall@onate.com / 083 800 0227.
