House flipping has recently become a popular way for real estate entrepreneurs to grow their portfolios, generate income, and save money for their retirement funds. It’s a lucrative business that also comes with its fair share of challenges. There are several ways you can find a property to fix and flip. However, one of the best ways to venture into the fix-and-flip business and cut costs is by investing in abandoned buildings. Among other benefits, abandoned buildings are often cheaper compared to the going market rates. Here’s how to fix and flip a commercial building into a booming business.
1. Finding Real Estate
Finding real estate is the first step if you’re looking to fix and flip a commercial building. Abandoned buildings can be acquired for far less than the market value and are among the most affordable real estate options. In the hands of the right house flipper, an abandoned property can be transformed into a high-ROI property with numerous prospects.
There are, however, a few things you’ll need to be aware of if you’re thinking about purchasing an abandoned property. Because they’re typically not listed offline or online, finding abandoned commercial real estate for sale is the first challenge. Start by looking around your neighborhood for real estate that looks abandoned. This may seem straightforward, but distinguishing between an abandoned property and an empty house can be challenging.
Common signs of an abandoned building include no cars in the driveway, structural problems, chipped or faded paint, and grass and weeds. You can also check with local authorities by scheduling an appointment with the county clerk. Since the government maintains data on property ownership, visiting the county clerk’s office can help locate abandoned properties. Ask banks whether they have an inventory of properties that are being foreclosed as well. When a homeowner is at risk of foreclosure or bankruptcy, they may completely abandon their home. When this occurs, the legal process can be lengthy. Visit various banks and inquire about residences that are being repossessed or are in the process of foreclosure.
2. Getting Loans
Getting a loan is the next step if you want to fix and flip a commercial building. Similar to other real estate transactions, you have an edge as a buyer if you can pay cash for the property. However, if you’re a first-time investor or new to real estate investing, it can be challenging to put together enough cash, even for a cheap property. Conventional financing through mortgage lenders is rarely an option for abandoned properties due to the associated defects of the property and its inability to appraise. Even if you can use the property as security to persuade a local bank to fund the project, you’ll still need to raise a sizable down payment.
Although implausible, there’s a possibility the seller may offer to finance your purchase. However, this can be challenging in the case of abandoned properties due to the likelihood that a truly abandoned property has already been seized by the government or a bank. Even if the property is just vacant, it’s unlikely you’ll be able to secure seller financing because the majority of these homes will have financially distressed owners.
Hard money loans are a common alternative for funding real estate investments. A hard money lender, also known as a private lender, engages in the business of providing short-term investor loans to real estate investors. Be prepared to pay premium interest or a sort of fee when seeking the services of hard money lenders. Remember to factor in the renovation costs needed to restore the property when getting an investment loan from a hard-money lender.
3. Plumbing
It should go without saying that not all plumbing is created equal. However, compared to residential plumbing, commercial plumbing is quite complex. Several challenges arise when dealing with the plumbing systems of commercial facilities. They’re quite different from simpler residential plumbing problems. Think of a family house, then a 20-story office building. It’s easy to see how distinct these are from one another. Some of the typical plumbing issues that occur in commercial systems may be similar to those that occur in residential systems. However, due to the scope of the plumbing systems, commercial issues can be exacerbated, creating problems for both property managers and renters. The best approach for fixing the plumbing system of a commercial building is to hire professional commercial plumbing contractors.
4. Electricity
Electrical repairs and upgrades are necessary if you plan to fix and flip a commercial building. You’ll need to hire a reputable commercial electrical service to address the electricity needs of an abandoned home. To find the best services, carry out adequate research. You want to be sure you’re working with the greatest firm for the task because not all services are the same.
For electrical installations, go for the highest quality installation services as mistakes can be quite costly. The good news is that there are things you can do to make sure you’re working with the best company. A great tip is to compare several commercial electrical services by reading internet reviews, seeking recommendations from friends and family who have used comparable services, and getting quotes from several businesses. Once you’ve found a few prospects, start narrowing down the list by evaluating factors like cost, customer service, and experience.
Before settling on a firm, research them further to assure yourself that you’re selecting the greatest service for your requirements. If you know someone who recently had commercial electrical work done, ask them for a recommendation. This is one of the most effective approaches when looking for a reliable business that’ll do a high-quality job. Find out if they were satisfied with the service and if they will use it again. You can always search online for company reviews if you can’t get personal recommendations, which is a great way to get people’s honest opinions.
5. Window Repair
A window replacement company is also necessary when planning to fix and flip a commercial building. Not every business that provides glass repair services is qualified to complete the job to your satisfaction. Choose a company that has experience offering the kind of services you’re looking for. Take into account the glass company’s operational experience. They should also abide by safety standards and other important laws. Your project may also necessitate filing insurance claims, particularly if broken glass or windows are involved. Working with insurance agencies can be challenging, but a reputable glass repair business will handle everything and provide high-quality repairs.
You should also look for a business that provides a range of glass-related services. Having access to a variety of glass options from several glass manufacturers can benefit your project. From custom glass, commercial impact windows, impact glass storefronts, or folding glass walls, a contractor should be able to meet or exceed your service needs. They should also be knowledgeable about the rules and regulations that apply to commercial properties in the community where the property is located.
6. HVAC
HVAC installation is perhaps one of the largest investments you’ll make when planning to fix and flip a commercial building. This is one of those situations where you should go for nothing but the best. By hiring a reputable and experienced heating and cooling contractor, you are guaranteed high-quality results. You’ll also get to save money on unnecessary expenses for emergency repairs once the building is up and running.
You also want a company that’s industry certified and licensed. Next, find out if they’re approved by the Better Business Bureau. If they are, this is a good indication that others in the industry value their dependability and status. A trustworthy commercial HVAC contractor should be insured. When a contractor has insurance, you aren’t held responsible if an accident that results in damage or injuries occurs, which means their protection is extended to you. However, before committing to their services, ask them what insurance they have. The goal here is to make sure you’re covered for all eventualities.
7. Extermination
Finding a reputable commercial pest control company that offers services such as rodent removal is a critical component of plans to fix and flip a commercial building. Find out if they’re registered with the pest control board.
The pest control industry has some shady businesses. A good number of them aren’t registered. They operate without approval from the appropriate authorities. With their only goal being to get the job done fast and get the money, and get out of your hair, they use pesticides that can be quite hazardous when misused. Legitimate businesses are always careful about the products they use and how they use them. They follow regulations regarding products approved by a board of experts.
8. Roof Repair
Roof repair is also a necessary step when you want to fix and flip a commercial building. Compared to residential roofs, commercial roofs are more complex. Therefore, always work with a commercial roofing contractor for all your roofing needs. Before settling on a roofing contractor, conduct some background checks to determine if they’re registered and recognized by the government. Ask them to present their registration license if your research isn’t fruitful.
The government demands that all commercial roofers be registered. Hiring a roofing contractor without a license for your roof repairs can leave you with much bigger problems.
Verify that the business contractor you want to engage is insured. This is the only way you can protect your interests. If they don’t have workers’ compensation insurance, continue with your hunt. Such roofers are nothing more than a potential liability. If you hire them and their workers are injured while working on your property, you can be slapped with heavy penalties.
By hiring a comprehensively insured contractor, you will avoid legal actions as you won’t be held legally responsible for their injuries. Another big mistake you can make is working with a commercial roofing contractor who’s inexperienced. If you go down this route, you’ll undoubtedly end up with a substandard job. This will cost you extra money as you’ll still need to hire another professional to fix the first contractor’s errors.
Ask to see a contractor’s past projects before hiring them to get a better idea of the quality of work they’ll deliver. To find out whether the owners of the buildings they have in their portfolio were pleased with the quality of work, ask for the contact information of those people or organizations.
9. The Clean Up
Once you’re done fixing the property, you’ll be left with a lot of waste that you’ll have to dispose of correctly. The best way to approach this last step of fixing an abandoned property is by making use of construction dumpster rental services. The ease and convenience of a commercial dumpster rental service are among its finest features.</>
You won’t have to worry about removing the dumpsters from your site. When you need them, the dumpster rental company will deliver whatever you need to your site, and when you’re done using them, they’ll send a team to pick them up. Renting dumpsters for your project will make things much easier.
The risk of injury from tripping, exposure to waste, and other hazards increase when waste and debris are left out in the open. When you rent a dumpster, your workplace will be free of the hazards posed by piled-up waste, and anybody who visits your site will find it disorganized. Workers also won’t have to transport toxic, hard, and sharp waste materials by themselves.
Understanding garbage disposal rules and regulations are essential to make sure you’re not fined or otherwise penalized by the authorities. Luckily, the dumpster rental provider will specifically state what you can and can’t put in your dumpster. Additionally, they’ll advise you where to place the dumpster, as certain locations have restrictions.
The fix-and-flip business is quite profitable. You can fix and flip a commercial building into a booming business with the right approach. Use this read as a checklist to fix and flip a project smoothly.