New Funding Resources 
Okay folks, it’s time for a checkup from the neck up as we begin a new year on the path to your real estate dreams. I am especially talking to you, fix-and-flippers out there, because this could be a terrific year for you. You have to get in the game if you want to score, though. If you want to score big, remember these five things that will be at the core of your DC real estate investment strategy.
Evaluate Your Rehab Costs.
First, once you believe you have found a potential property, you have to ask yourself, “What will it cost to fix this up?” When asking that question, you have to be honest with yourself about the condition of the property. I know that I’ve been in situations where I wanted a deal to happen so bad I overlooked apparent signs that this was a bad deal. You can miss old pipes, pet smells, the reputation of the property, and a lousy roof because you are blinded by location or price. Even little factors can add up to become huge factors that soak up profits and explode timelines.
You cannot assume the best-case scenario when estimating the renovation costs. Something is always hiding beneath the surface or behind the walls. It’s the nature of the rehab business, and you must plan for it.
Determine Your Desired Return on Investment.
Second, you have to establish the worth of the deal. It’s not enough to know you will break even. No one wants to work for free, and this is what you will do if you break even. You have to know your margins and ensure there’s enough profit to make it worth it for you personally. I’ve known investors who were happy just to make $10,000. There is nothing wrong with making $10,000, especially if you are new to real estate investing and it is a quick in-and-out flip.
Other investors are like Linda Evangelista, a nineties supermodel who famously said she doesn’t wake up for less than $10K (well, $30K, if we adjust for inflation). And that’s OK as well. The investor’s prerogative determines what profit amount will motivate them.
Once you know your personal profit expectations, you can use it to derive the maximum amount you can afford to pay for your next investment property. You can do it by using our nifty maximum purchase price calculator, a proprietary tool we’ve created to help our borrowers with analysis.
Factor in the Time You Are Going to Spend.
Third, consider the time you will be putting into the transaction. I assume your time is not free. You can spend it pursuing other investment opportunities, getting an education, or just enjoying yourself. Time is money, and money is great. It’s not, however, the end goal. Before plunging into real estate investing, ask yourself whether you will enjoy being a real estate investor. Trust me, it’s not all glamor and HGTV. It’s sweat, blood (hopefully not much), and tears (occasionally). It’s also managing people, taking risks, and creating value. Are you suited for it? Would you be good at it? Do you like it enough to spend your Saturday mornings doing it? Only you can answer this question.
New Funding Resources LLC is a private hard money lender specializing in DC real estate investment market. We work with borrowers looking to make profit and build value by renovating distressed properties in Maryland, Virginia, and Washington, DC. If you have an immediate deal to discuss, please call 240.436.2340 or apply online.
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