Check out đ this recently funded fix and flip project in Reno, NV. Lantzman Lending made a loan for $325k on a purchase price $352k to the borrower.
The investor purchased this property in Reno for $352k in August of 2023. The goal was clear: to undertake a full cosmetic remodel that would breathe new life into the space and sell it for a substantial return on investment. Fast forward to the end of February 2024, the property sold for $495k. However, the venture was not without its hurdles. The property was on the market for nearly 4 months, a duration longer than most investors hope for, before finally securing a buyer. They did a excellent job on getting it renovated and on the market within 90 days, but market conditions seemed to slow them down on the sale.
The project’s timeline shed light on the significant impact of seasonal trends in the real estate market. Listing the property during the winter months can pose an unexpected challenge, that can affect the return on investment. Some dangers of trying to flip a property during winter can include construction delays due to weather conditions, seasonal market slowdowns which is very common and can be significant , and the critical importance of marketing time that can affect the holding costs & sales price. These risks highlight the necessity of considering seasonal market trends, especially in climates like Reno’s, where weather can play a pivotal role in real estate dynamics.
One strategy utilized on this flip project was virtual staging. This modern technique allowed the borrower to furnish the property digitally, providing a cost-effective and flexible alternative to traditional staging methods. Virtual staging not only enhanced the property’s online appeal but also enabled buyers to envision the potential of the space. However, this method comes with limitations, including the lack of physical interaction with the space, which can be crucial for some buyers. Sometimes virtual staging can leave the buyer disappointed when they get to the actual showing.
Drawing from this experience, we offer this sage advice to future investors considering fix and flip projects.
- Understanding and anticipating seasonal market trends can be a game-changer in maximizing return on investment. This is a double edge sword, as it can mean lesser than expected return for properties bought in summer, and greater returns for property purchased in winter when the spring buying season arrives.
- Strategic planning, from renovation timelines to employing innovative marketing techniques like virtual staging, is essential for success.  While we prefer actual staging, virtual staging is a viable alternative for enhancing your online profile and increasing traffic.
- Investors are encouraged to delve deep into market research and remain adaptable to unforeseen challenges. Thin margin deals can turn into break even projects pretty quickly. Across California during the winter months, the median home price dropped by 8% from Nov 23 to Jan 24. For many fix and flip deals that can be the entire expected profit.
As always, we are here to lend & educate our clients whether it is your first flip or your 100th!
