Fix and Flip Versus Home Rehab

Renovating a home to flip

If you’re considering switching careers and starting a business that buys and sells homes, it’s important to understand the different types of investment properties and the levels of repairs. This article is designed to help you get started on that journey.

A Fixer-Upper

A home listing that includes “fixer-upper” generally means that the structure remains intact and the interior needs work. Adding a fresh coat of paint, replacing flooring, carpets and other cosmetic repairs will restore the home’s desirability and raise its value for short money.

A Home Rehab

Home rehab can involve replacing all the major appliances, repairing foundational issues, electrical wiring, water damage, and fixing or replacing the roof. Because of the extent of the repairs, you’ll need permits and the home must pass inspections prior to a listing of the home. 

The Need to Borrow Money

A total home rehab is not something that most companies do with their own money. Instead, they apply for hard money rehab loans. These loans are easier to acquire versus a traditional commercial mortgage through banks and credit unions. They also have a fast turn around, with many loans funded within a few weeks. If you prefer to use your own money to avoid interest and other fees, a fixer-upper with mostly cosmetic repairs may offer a more affordable option.  

Hidden Costs Involved

A fix and flip property dispenses with many of the additional costs of a rehab. Unlike a home rehab, you won’t need to pull permits, hire contractors, and pass a final inspection prior to listing it. A fixer-upper in general needs TLC. It may be abandoned, a foreclosure, or simply neglected due to a lack of money. However, in most cases, a fixer-upper is a preferred choice over a home rehab for first-timers who want to keep costs down and who are handy.

Profit Margin

Whether you are buying a fixer-upper or one in need of a total home rehab, profit margins will vary. The location of the property will offer an assessment of what a similar home sells or rents for in the area. However, if costs consume the profit, it may not be worth the investment. This is where a unique fixer-upper that requires your time instead of a lot of money, works to your advantage. On the other hand, if the assessed value of other homes in the area is $60,000 more and the fees involved come close to or exceed the figure, the investment isn’t in your best interest. 

Developing a System

Properties come on the market and often sell within the first few days of being listed. Having systems in place such as available funding, contractors ready to go, and a supplier eager for business, are all recommended. Prior to buying your first property, you should have all the resources you need lined up and ready to go at a moment’s notice.  If not, you’ll end up losing out on potential moneymakers. 

Time Constraints

A fixer-upper is something you can do at your leisure. You won’t have follow-up calls with contractors to see when they will complete their work. The only time constraints are yours if you need additional income through renting out the property or need a quick sale. With home rehab, you have money owed and deadlines to meet in order to preserve your profit. The sooner the home is complete and passes inspection, the faster you can list it, sell it, and repay the lender. 

If you’re looking to start a new career, make sure it’s a good fit for you. There are several differences between a fix and flip and a total home rehab. Do your research to discover both processes and what’s involved prior to deciding on what types of properties to invest in. 

Tips for Budgeting Your Money to Achieve Financial Freedom

An eagle soars in freedom

Making wise decisions regarding your money will encourage personal financial growth and stability. A budget gives you financial freedom. It helps you identify where your money goes, which results in better financial decisions. Here’s how to get started and stick to it.

A Plan of Action

In short, a budget provides the tools for personal wealth. Using one helps you refrain from making poor decisions regarding your money. With a clear view of your debt and your income, you can achieve financial goals. You learn how to pay down your debt and keep more of your money for personal gain.

Eliminating Wasteful Spending

Most people will admit that they waste money. You may do so without noticing. Habits you develop, such as buying coffee on the way to the office or ordering meals out a few times a week, are normal occurrences. Unfortunately, they are sapping your extra cash, leaving you short financially for the things you need. You can afford to spend money on products that benefit your personal hygiene and health, like Konjac sponges and an electric toothbrush.

Reuse Instead Using Once Then Tossing Away

The good news is there are dozens of ways to spend less on the things you need. For example, you use traditional paper towels once and toss them away. Instead, consider replacing disposables with items you can reuse. Bamboo paper towels and cotton cloths are two examples that will save you money and help reduce waste in landfills and toxins in the air. Travel mugs and water filters eliminate the need for disposable cups and plastic water bottles. You get the idea.

Pay Your Bills on Time

Paying your bills on time eliminates accrued interest and late fees. It also helps you increase your credit score, a three-digit number that can work in your favor or against you. A poor credit score can cost you dearly. It can prevent you from buying a home, a car, or sending children to private schools and colleges. It can also make it harder to get into an apartment and cause you to pay a security deposit on utilities. On the other hand, a good credit score opens the door to the lowest interest rates on large purchases, saving you a ton of money over the term of the loan. It also gives you access to the best insurance companies and can make you a desirable candidate when searching for a job. 

Smart Shopping

Before making any purchase, it’s always best financially to shop around to make sure you get the best price. Food shopping costs the average family over $200.00 weekly. Comparing the weekly fliers of the local supermarkets and using coupons for the things you need can shave $20.00 or more off the bill weekly. That’s $80.00 or more a month and nearly a thousand dollars a year in savings. Shopping on certain days and after a holiday can provide a savings of 40, 50, or even 60-percent off a product’s original sticker price.

Establish Savings

Unexpected expenses will happen. However, if you have money in a savings account for these moments, they become more like non-events. Unfortunately, without savings, any small hiccup that requires money can quickly become a financial disaster. 

Allocate Funds to Several Places

When you have a budget, you set aside funds for the things you want. You can allocate money for a down payment on a home or to purchase a new car. You can also set aside money to fund your child’s education and to enjoy financial comfort in your retirement. 

Budgeting your money doesn’t mean that you live life without. In fact, it provides the opposite, financial freedom. Use a household budget to achieve these goals and enjoy a better quality of life. 

5 Tips for a Thriving Business During the Pandemic

Many businesses have suffered or failed during the pandemic. This is not news to the countless people who have lost their job. To put this in perspective, US job losses due to Covid are the highest since the Great Depression. Very few people have figured out how to keep their business going during this time of crisis.

There is no single answer that will serve as a solution to the problem. Rather, there is some combination of many answers that will help keep the OPEN light turned on. No two businesses are the same. And no two sets of answers will be the same. Here are a few you can try that have proven successful for others:

1. Fix Your Car

There are lots of business opportunities in the Great Northwest. Besides a couple of high-density populations, the people are spread out. If you are in outside sales, you will need a car to cover most territories. The relatively mild weather is quite conducive for getting out and knocking on doors.

If you want a small advantage in a competitive space, you need to take care of the little things. Take your car to a Washington auto body shop before you take it to Spokane to sell that water purification system. You are not going to make that $5,000 sale if the customer does not take you seriously. Drive up with that busted tail light and huge dent in your door and they will very likely not bother to answer their door when you knock. Make a better first impression and end with a better result.

2. Improve Your Education

There is always something you can improve through ongoing education. In an effort to save money, some people discontinued their formal education when things went sideways. They thought they would have plenty of time to pick back up after the crisis. Unfortunately, it seldom works out that way. After a crisis is over, people are busy scrambling to try to make ends meet. Education gets put on the back burner. You can increase your odds of success by continuing your education when others have chosen to opt out. Make the most of this opportunity by investing in yourself.

3. Take Your Business Online

Not every business is going to benefit greatly from an online campaign due to the nature of their business. But most can achieve some gains by expanding their presence. If you are a local business, you can improve by appealing to a local SEO marketing campaign. You might not be able to ship your home improvement service to customers around the world. But you can get the word out to more people in surrounding areas. They are far more likely to ask their digital assistant for a recommendation than they are to look you up in a print directory.

4. Stay Open During Regular Hours

One of the biggest customer frustrations in the Covid era is trying to figure out when businesses are open. It used to be from 9 – 9. Now, we are lucky if that same business opens by 11. Compounding the problem is that hours seem to be different from one day to the nest. And punctual opening is a thing of the past. You can improve your business just by being open for consistent, advertised hours. If people travel to your store only to find you closed, they are unlikely to do it again.

5. Add a Delivery Option

We are fast becoming a delivery culture. It is not just pizza and Chinese food anymore. Pharmacists, grocery stores, and restaurants, are just the tip of the iceberg. There is no good reason why other businesses like auto parts, pet supplies, and electronics retailers shouldn’t also be in the delivery game. Figure out how to deliver and your business will gain an advantage that will last beyond the pandemic.

Coronavirus has sidelined a lot of businesses. but business is all about the ability to adapt to change. Adapt by fixing your car, increasing your education, going online, opening for regular hours, and finding a way to deliver.

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