When choosing a property for a fix and flip project, it is essential to estimate the value of the property to make sure the investment is worthwhile. Investors use a variety of estimation methods when trying to make a decision about an investment property, and reviewing some of these common techniques can help you more accurately plan your next project.
Outsource an Appraisal
The easiest but most costly method is to hire a professional to perform the evaluation. This means you could bring a professional with you to view the property. Outsourcing the value estimation process is the most accurate way to assess a property, but you are responsible for appraisal fees and the turnaround is determined by how quickly this third party can get the information back to you.
DIY From Scratch
Another option is to scrap the idea of a professional analysis completely and handle the legwork on your own. To accomplish this, you need experience in the field. During a walkthrough or open house, you can take detailed notes with the understanding of which items and situations add value to the property and which ones detract from it.
The main benefit of this method is the cost. You don’t have to worry about paying appraisal fees and you’re not at the mercy of a third party when it comes to your timeline. This doesn’t mean that the process is faster. Often, it takes more time for you to complete an accurate assessment than a professional, but if you are knowledgeable in the area it can be almost as accurate as an outsourced evaluation. Although it doesn’t physically cost you as much in fees, your time is also valuable and should be considered as an expense.
Use General Comparisons
If you don’t want to hire a professional but also don’t have the time or expertise to perform your own evaluation, you can choose a third option that saves you both time and money. You can use generalities about the property, along with comparables, to give a general estimate without a detailed checklist. This approach is likely the least accurate, but can still give you a general idea about whether the property is worth pursuing as a fix and flip.
No matter what method you choose for fix and flip property evaluation, analyzing the property for maximum profitability should always be incorporated into the initial steps of your investment plan.