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Master The Art Of How To Spot A Real Estate Investment Property With These 3 Expert Tips

We’ve been sharing advice with new investors about dodging scams and what not to do in their flipping business so, in this article, we’re going to tell you our top 3 tips for what you should be doing to spot your next deal. And, since we handle each step of the process in-house, from pre-qualification to final payment, including payment collection and draws – we’re proud to say we can give you advice tailored to your situation. 

1. Location 

Where are you going to look for your next house to flip? First, look for a location with a high population of over 500,000. Not sure where to start? Check out freempatools for a free zip code search tool. Search the population within a 30-50 mile radius. Use Melissa.com for the demographics like population, age, family, housing, and more to tailor the renovations towards the predominant buyers. Choose a town that’s near or accessible to a major city by distance or by public transportation. Consider school ratings as many of your potential customers will be families. At greatschools.org you can easily find highly rated schools for free. Avoid rural areas where population density is low as there will also be fewer comparable sales to drive the value of your property. Fundamentally, you want to go where people want to buy or rent.

2. Price 

How expensive can your property be? Regardless of your loan program, when it comes to the down payment and carrying costs, don’t purchase a property any more than 4 – 5 times what you have in cash. So, if you have $100k, at most look for a home under $400 – $500 total. Keep in mind that total is not only inclusive of the purchase price. You also need to factor in the title closing costs, the rehab component, carrying costs such as lender fees, utilities, insurance, etc, and other unforeseen costs such as budget changes or overages. 

To help you estimate your rough rehab cost, we advise our clients to multiply the total square footage of the home by $50 for a good starting point. For example, a 2,000 square foot home could require about a ~$100k rehab budget.

If you are looking at a $100,000 budget and trying to be in your project for $400k total or less, with all expenses considered – that means you should look for properties to buy in the $300k or less price range.

3. Value

How do you determine what your flip will be worth when the project is completed? There are many reasons to collaborate with local realtors, and one is so they can help you research “comps” or comparable sales. Half of your battle when flipping is the purchase price, but the other half is the end value. It’s important to understand what homes in your area are valued at and what has recently sold so you don’t over-design your home right out of the market value. A $400,000 property does not need $1,000,000 property finishes, but can’t pass by with $100,000 property finishes either. 

Once you have determined the end value of your potential project, you can use that number to work back to your offer price. We recommend that our clients follow the 70% rule, which means you want your project costs to be no more than 70% of what the property will be worth when the project is complete. Continuing from the example above, if you are looking at a $400k project then the 70% rule means that the home would need to be worth at least $571k when completed. If it sells for that amount, and your project cost is $400k, then you gross $171k in profit. Your net profit would be after all expenses mentioned in the second section (title closing costs, carrying costs, etc.). Following this rule allows for some wiggle room for surprise costs so you can still be profitable. Combined with the knowledge of what homes around you have sold for, you have everything you need to spot the right property for you.

We know that one article just isn’t enough. That’s why we equip our team with professionals who have done flips themselves. Not only do we keep the entire process in-house, but we personally know what it will take for you to be a success. We’re proud of what our clients have accomplished with funding from Builders Trust Capital, and we’re excited to help more people realize their dreams each day. Give us a call and see how our team can help you spot your next deal, 856-422-3232. 

Builders Trust Capital Client Success Stories

Partner with an efficient, personable team who has delivered $160,000,000 in real estate loans

Builders Trust Capital Success Story Photo: 1185 Route 9 South, Cape May Courthouse, NJ
  • Purchased $185,000
  • Rehab $150,000
  • ARV $475,000
  • Fix & Flip Philadelphia, PA
Builders Trust Capital Success Story Photo: 10 Anderson, Morristown NJ
  • Purchased $1,675,000
  • Rehab $450,000
  • ARV $3,955,000
  • Fix & Flip Cape May, NJ
Builders Trust Capital Success Story Photo: 10 Anderson, Morristown NJ
  • Purchased $550,000
  • Rehab $208,286
  • ARV $1,005,000
  • Fix & Flip Haddonfield, NJ

How to Finance Your Real Estate Investment

Our process is simple! We handle the entire loan process in-house. Loans are closed in as little as 10 business days.

Get Started

Fill in the form or call us at 856-422-3232 so we can contact you and begin working on your loan. We're local and happy to meet with you to learn your funding needs.

Pre-qualify

Complete your application and provide supporting documentation.

Proof of Funds

Increase your buying power with a proof of funds (POF) letter.

Loan Processing

Your appraisal and title work are ordered. Your application documents are reviewed. Our in-house processing team will contact you with any questions or additional documentation required.

Get Funded Now

After underwriting is complete, we make sure your closing docs are ready at the table and funds are disbursed timely so you can start your work without delay.

Testimonials

Photo of Alexandra Petruchenya

I appreciate your team's support during the entire rehab process for my property. This is my first deal, there were a lot of unknowns that came with that. The construction process intimidated me and held me back from doing real estate for several years. Kurt has been phenomenal, he was a wealth of knowledge. I appreciate how he gets in touch to talk through in-scope item completion and aligning on ways to ensure my construction draws are adequate. I'm thankful to have someone who has my business's best interests at heart.

Alexandra Petruchenya recommends Builders Trust Capital Oct. 2021
Photo of Sharina Jackson

I recently completed a cash-out refinance transaction with Builders Trust Capital. I would like to say thank you to Anthony for your partnership during this process, your excellent customer service and professionalism made the process easy for me.

Sharina Jackson recommends Builders Trust Capital Oct. 2021
Photo of Raphael Akinsete

If you are a newbie investor, I highly recommend Builders Trust Capital because your first few deals will impact your outlook on real estate investment. If you are a seasoned investor, I also recommend the company as they now offer products for both quick flips and long holds. This way you are covered in both your entry and exit strategy. As a longtime client of Builders Trust Capital I can testify that they are the real deal and there are genuinely good people behind this business.

Raphael Akinsete recommends Builders Trust Capital Oct. 2020
Photo of Kristian Latham

Just finished up my first project with the Builders Trust Capital team and wanted to share my appreciation for the good business. Success is often driven by effective relationships, and Builders Trust Capital’s partnership assisted me in strengthening my team all around. The process from beginning to end was smooth and efficient. They are a great partner to have to create opportunities for rookie and veteran investors.

Kristian Latham recommends Builders Trust Capital Aug. 2020
Photo of Timothy Rosenblum

Builders Trust Capital lives up to its name. They have truly been a partner to me with my projects. The process from underwriting to construction inspections has never wavered from their initial promise and Ive always been met with professionalism and efficiency. Rare in this space.

Timothy Rosenblum recommends Builders Trust Capital Apr. 2021
Photo of Mike Bonadies

Builders Trust Capital is an incredibly responsive and flexible lender for RE investors. They have been able to work with my unique situations and helped us close on properties no one else could. They know their local area well and can offer guidance. I highly suggest them.

Mike Bonadies recommends Builders Trust Capital Apr. 2021

Ready to discuss your funding needs?

Just contact us by phone 856-422-3232. If you prefer, send us a message and we’ll contact you shortly. Let's get started working together.

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