The fix and flip market has been growing for years, but some commercial real estate investors are using a fix and hold strategy to generate revenue. We are going to look at the differences and advantages of both fix and hold as well as fix and flip investments.
Fix and Flip Property Investments
Property flipping is one of the most accessible ways to generate revenue for commercial real estate investors. The concept is simple: Start by purchasing a property at a price that is well below market value. Renovate the property and make improvements within a set budget so the overall value upon completion yields a profit, then list the property and make a sale. The trick is finding those run-down properties in places where the overall market is high, or where the neighborhood is being revitalized either due to new construction or new businesses coming to the area. Some property flippers generate more revenue with one or two sales than many people earn in a single year.
Fix and Hold Properties
There are times when a fix and flip project doesn’t turn out quite as planned. Sometimes the property evaluation is lower than expected because the surrounding properties are also run down, or because the neighborhood is still in the process of being revitalized. There are also times when the market is slightly depressed, and selling a property will yield less of a profit than it would under different conditions. These circumstances open up fix and hold opportunities for commercial real estate investors. In most cases, investors will choose to rent out those properties instead of selling them. Turning a property into a rental allows investors to generate revenue and pay off the mortgage. Then, when the market is right, they can turn around and list the property for sale. Additionally, the fix and hold strategy adds equity value to a property portfolio which investors can leverage to acquire more commercial real estate.
Get Financing for Your Next Rehab Project
Whether you are taking a fix and flip, or fix and hold approach to commercial real estate investments, contact the team at Nanaki Capital. We will work with to provide financing solutions for everything from property acquisitions to renovations and more so you can start generating revenue faster. Contact our offices today to get started.