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Flipping commercial real estate properties can be expensive– there’s no doubt about that. From taking out loans to paying for repairs, it’s hard to say what a project’s final expenses will look like. Luckily, there are a few things that even first-time flippers can do to reduce their final expenses.
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Pay in Cash Whenever Possible
Did you know that you may be able to cut a deal if you are able to pay for something in cash or for a majority of the final cost in cash? This is true even at professional lending institutions and loan offices. The best way to find out if a business will give discounts for paying, in part, with cash is to simply ask.
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Even if a business or loan officer will not give discounts for paying in cash, you will still benefit from paying as much out of pocket, to begin with, rather than taking out the entire amount for repairs that you need in loans. This is because the less money you take out in loans, the lower the payments will be. As a bonus, interest will not compile as quickly, which will also help to save money.
Use Fix and Flip Financing Programs
There are financing programs designed specifically for property flippers, and cover the costs of acquisitions and renovations. Fix and flip lines of credit, and fix and flip loans, can be used by property investors to tackle individual projects, on up to hundreds of units simultaneously. Fix and flip financing programs are structured around the value of the property involved, and are very accessible to property flippers at all levels.
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Work With a Partner
Lastly, having a business partner can help to relieve the burden of some of your expenses. When you have a business partner, all of the expenses should be divided between the two (or more) of you. This option can work whether you can pay in cash or not and whether you can get a government-funded loan or not. Just make sure that you are working with someone you can trust, as you will also need to share your profits.
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When looking to fix and flip commercial real estate, try to pay in cash, take out loans with low-interest rates, and work with people who you trust. Doing all of these things can go a long way to saving you a lot of money.
