How to formulate a foolproof fix and flip plan

Processes in place

When it comes to having a foolproof fix and flip plan, having solutions in place that are reliable and repeatable is a big help. Organization is key in this industry so if you can be on top of everything going on you’re already on a path to success. Having a daily planner or a notebook on hand to keep tabs on your work is a great place to start. There are also websites that mimic this organizational style, so it just depends on your personal preference and whether you are technologically savvy or not. There are important dates to remember, contact information that you’ll always need on every deal and benchmarks you need to hit to finish the project before your deadline.

Some lenders in the industry will also offer investors tools for success. At RCN Capital, we have a House Hacker: Rehab Budget Builder tool that helps investors get a sense for the scope of their work. There are similar products out there that can help put an investors mind at ease as well. With everything that they need to get completed regarding the renovation of their property on paper, the work gets a little bit easier. There is a plan to follow and a budget to adhere to. Tools such as these can be the difference between the completing a flip on time or being disorganized and not getting the job done in a timely manner in accordance with the loan an investor secures.

Another document that is a mainstay that investors rely on is something known as an executive summary. It is a short 1-2 page summary of the property in question, the work required to get done, and any other appealing aspects regarding the property itself or the market it is situated in. Outlining the opportunity and showing the initiative to get the opportunity on paper is a great way to market yourself to a broker or a lender.

Speaking of lenders, it is important to speak to more than one when you are zeroing in on the right fix and flip loan for your project. Organizing all the term sheets from different lenders to gauge their product offerings, their loan to value percentage and the interest rate you could receive from them is crucial. Run through the pros and cons of each term sheet and pick the one that is best for you. Also, make sure to keep every contact you speak with at these different lenders and keep them in your planner or contact book. You never know when you’ll need to reach out to them in the future when you need to switch up lenders or just ask questions to gain industry knowledge. I will mention that switching lenders is not ideal but sometimes it needs to happen. The preferred course of action is to establish a working relationship with a lender that you can rely on.

Reliable relationships

As mentioned, relationships in this business can be everything. For a savvy investor that completes multiple flips in a year, you can become a best friend of a certain lender of your choice by providing them with repeat business. What this will do is allow you to establish a presence with that lender and hopefully a dedicated loan officer. This will expedite your process immensely when you have a loan officer in your contacts that you can send all your potential deals to. Closing multiple deals with one lender leads to them getting excited when you call, potentially dropping other work to help you close a loan and provide extra guidance down the line if something comes up where they feel like they can help. You’ll also always be in the loop with updated industry guidelines and if there are investor specific tools that can aid in your business that lender will certainly share with a repeat investor that helps bring in business to the company.