Source: Forbes —
We’ve all heard the saying, “The number one rule in real estate investing is to never lose money.” So, as a real estate investor, how can you ensure you make the right investments? Well, it all starts with understanding the specific category of investing you’ve chosen. Let’s look at two very popular types of real estate investors.
A fix-and-flip investor, also known as a rehabber, is an investor that purchases a property with the intention of adding value and reselling it. Single-family homes are the primary investment choice for fix and flippers.
A tried and true method for ensuring that a fix-and-flip property is profitable is to use a rehab calculation when purchasing the property. A rehab calculation is an equation that uses four pieces of information: the asking price, the approximate remodeling and rehabbing costs, the current market value and the “purchase” price. The asking price and the actual purchase price aren’t always the same thing.