There are three primary methods by which fix and flip professionals estimate the value of investment properties. While no one approach is better than any other, each of them can be used situationally when they match up with what you’re trying to accomplish. Generally speaking, the factors which will determine which approach is to be used are based on accuracy, cost, speed, and thoroughness.
Hire a professional
This is probably the most expensive option, since a professional will charge you for their services, but they do provide a high level of thoroughness, along with speed and accuracy. You can also have a high level of confidence in their evaluation process, since they have experience and a great deal of knowledge in evaluating property values.
Obviously there are no fees associated with doing the evaluation yourself, and assuming that you are motivated to do a good job, you may still achieve accuracy and thoroughness. However, it’s not at all likely that you will be able to do the job as quickly and efficiently as a professional would, so you will probably be sacrificing speed if you take the task upon yourself.
Rule of thumb method
The third most popular method for evaluating a fix and flip property is known as the rule of thumb method. When you take this approach, it involves substituting a detailed evaluation model with data that simulates the results you’re trying to analyze. This provides excellent speed with a fair amount of accuracy, although thoroughness may be sacrificed somewhat, because potentially key issues may be overlooked.
Investing in a fix-and-flip property?
If you need funding to invest in a fix-and-flip property, you should contact us at Safe Harbor Commercial Capital, where you’ll always find the most affordable financing. We’d like to hear from you, so we can discuss some options which may be available to you for your next fix-and-flip property investment.