As you search for new property in a tight real estate market, there’s often no room for negotiation or an opportunity for substantial ROI. In today’s economy, limited real estate availability and rising inflation often result in new requirements for proof of liquidity. In the short term, uncovering higher prices in untapped real estate locations can offer more opportunity for a buy-and-hold investor and more value in the long run.

So, what’s the most intelligent approach for your next real estate investment? Here are some considerations.

Preserve Your Cash

When making an offer, investors should never forget cash is king. But sometimes, it can be a challenge to manage your money thoughtfully on a fix-and-flip venture.

What’s this mean for you? Don’t pursue over-improvements and renovations based on your tastes; instead, focus on making the property attractive enough for when you decide to flip. You certainly don’t want to lose out on a buyer because you overindulged on the backsplash or installed a lap pool in an already-finished basement.

Establish a Budget—and an Out—Before You Start

Key to your success is establishing rehab guidelines before starting your project. Having a detailed plan to follow for all improvement work on a property will keep you within your budget. More important, this pre-planning will ensure you maintain your profit margins and help you cope with any unforeseen issues during the project.

Whether you’re leaning toward flipping versus renting the property, make sure you know your margins ahead of time and know when it’s time to pivot. Get your finances organized from the start, and refrain from letting your ego get in the way.

Also, don’t spend too much on expensive materials or too little on solid craftsmanship. Those mistakes can put you in the hole and affect your ROI. Most homeowners tend to think they must upgrade everything before selling. The more intelligent approach is to find the 20% of upgrades that will add to 80% of the value. Most of these will likely be cosmetic and much cheaper than you’d expect.

Understand the Values in a Particular Market

Look for more rental demand in larger markets now that people are expected to return to work in person. According to Entrepreneur, nine out of 10 companies are requiring a hybrid or partial return to the office in 2023, which may lead to demand for more rentals in larger markets. So, make sure you thoroughly do your research. And don’t forget your pending property may require an appraisal when you seek a loan, depending on your liquidity history.

Find the Right Financing Partner

Wherever your path to real estate investment takes you, make sure you partner with a lender that has your best interest at heart. Research your options from small to large and in between because there are differences in how they’ll approach their work with you:

  • Large-size financing partner: Conglomerates tied to Wall Street or insurance companies and restricted or motivated by secondary market implications
  • Medium-size financing partner: Larger private lenders whose funding comes from multiple private equity resources
  • Small-size financing partner: One-off investors who consider real estate less of a risk than investing in the stock market

In today’s tight market, it’s more important than ever to be smart about how, when, and where you choose to invest. Think wisely about spending on a fix-and-flip first, and don’t be afraid to hold and rent—and then sell later. If the market isn’t delivering good opportunities and great returns in this new year, there will always be another opportunity to sell later.</p

John V. Santilli is the chief revenue officer for RFG. He joined the company in July 2019 and is responsible for all opportunities connected to it,, including expanding the company’s sales channels to maintain its position as a leader in rehab financing.

Before joining RFG, Santilli had 25 years of lending and marketing executive leadership experience across multiple private and public marketing-dependent companies. He managed companies from startup to maturity, ranging from $2.5 million to more than $50 million in annual revenue.

  • John Santilli

    John joined RFG in July 2019, and is responsible for all opportunities connected to the growth of RFG. He is focused on expanding the company’s sales channels to maintain their position as a leader in rehab financing. Prior to joining RFG, John had 25 years of lending and marketing executive leadership experience across multiple private and public marketing-dependent companies. He had managed companies from start-up to maturity ranging from $2.5M to over $50M in annual revenue. John earned a Master’s Degree in Management from the University of Pennsylvania and a Bachelor’s Degree in Business Administration with a concentration in Marketing from Drexel University. He currently resides in Wynnewood, PA, with his three children, and enjoys family first, live music, and finding the perfect balance of work hard/play hard.

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