Finding a fix-and-flip property can be tricky. Not all properties are created equal—especially if you are buying a foreclosure or bank owned REO.  It’s worth your time before you buy to carefully analyze the costs and projected profit for these properties.

1)      Take a contractor with you on a walk through. Obviously you should walk through the property a couple times to get a feel for the condition it’s in. Take a contractor who specializes in fixing or “rehabbing” properties and have them give you an estimate of what it will cost to fix up.

2)      Research comparable properties. Find comparable properties in good condition and find out what they are selling for.  Make sure they are truly comparable properties and figure out how much you could conservatively make off the property after subtracting the cost of the repairs.

3)      Look at sales in the area. Get a good idea of the area the prospective property is in. Is it in a neighborhood with strong schools? Is it in a neighborhood with a lot of rentals or high turnover rates in ownership? Do homes in this area sell quickly? All these things need to be factored in to your decision.

When it comes to fixing and flipping you will never regret doing your homework on the property and taking time to make sure it’s the right choice—but you will regret rushing in.

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