Interview: This is what it’s all about!

To successfuly complete a Fix & Flip project, the ultimate goal is to make a profit. The basic idea of Fix & Flip is to increase the value of a property. You buy a cheap but lucrative property, add value to it yourself and sell it at the end for a profit. This means you have to work cost-efficiently to keep your expenses low and thus increase the profit.

We conduct the interview with Immobilien-Erfahrung.de (in conversation “IE”). We talk in the interview about:

• The purchase and finding of lucrative properties
• Saving costs when upgrading and renovating
• The profitable sale of the object
• Bonus topics such as taxes, legal forms and financing

What is Fix & Flip?

FIV: Let’s start with the basics. Can you start by explaining what Fix & Flip is and how it works?

IE: Of course! Fix & Flip is a strategy or even method from the real estate world that focuses specifically on trading real estate. That is, unlike traditional real estate strategies where properties are held to generate long-term returns, Fix & Flip actively trades properties. The core aspect is to increase the value of real estate in order to generate profit when trading. The increase in value is achieved through cost-effective upgrading and renovation.

So the strategy consists of three basic steps – buying, upgrading and selling.

Fix & Flip Find & Buy Property

FIV: We have already talked about Fix & Flip in one of our articles and have shed some light on the three steps. Surely we could not clarify everything there what an expert with experience can report about it. Let’s go through the three steps again and see what you can tell us. Let’s start with the first step – the purchase.

IE: Yes, with pleasure. Getting started is the biggest difficulty! In order to start trading real estate at all, you need real estate. So the first step is all about acquiring real estate. This is also one of the most complicated parts of Fix & Flip. First of all, you need to create and work through a criteria checklist when searching for the perfect property.

Criteria for the selection of Fix & Flip real estate

IE: The checklist for the real estate search should include important key data that are important to you as a flipper. Basically, the location and the condition are the basis for the decision.

The property must be in an advantageous location for you. Advantageous in the sense that it is an attractive area for future buyers – so it can be sold quickly – and is still in an affordable location for you. A-locations are not advantageous, since city centers, for example, are not worthwhile in terms of price. B-locations or developing C-locations are much more suitable.

In addition, the condition of the property must be considered. Since the focus is on “cheap” properties, these often also harbor problems. This is fine to a certain extent, of course, as the strategy involves “fixing” after all, but it should still not be overestimated.

With the Fix & Flip it is important to avoid sanitation!

These are too costly and time-consuming. The building fabric of your object should therefore basically be in tact.

FIV: With the basic criteria in mind – where is the best place to look for real estate?

Search & buy objects: How do I proceed?

IE: Online portals provide a solid basis for the search. Here, offers in the corresponding location can be found and compared with each other. So you get a rough picture and an idea of the price. However, I would rather use the online portals for research and not for the purchase.

You get the better buying options privately through off-market properties. Ideally, you already have a network of people who will contact you as soon as they hear about a sale. If you don’t have that, you have to look for the personal contact yourself. Either you show yourself, for example through marketing and let customers come to you, or you take the initiative and approach customers personally.

To explain this now would go beyond the scope of this article.

FIV: Okay good. We’ll summarize the first step again:

• Checklist with criteria for the property
• Location & condition of the object are important
• Avoid objects in need of renovation
• Use online portals for research
• Off-market real estate from private contact

What would come next? The upgrade?

IE: I would talk briefly beforehand about financing options for the purchase.

Fix & Flip financing: which loan is suitable?

Just recently I talked to one of our partners about an interesting topic and that is Fix & Flip without equity. In order to run Fix & Flip without equity, you need outside capital. The debt capital is provided through loans and credits. In discussing which type of loan was best, I first realized how important the question of financing is in the first place.

Therefore, I wanted to briefly list the most important points again.

The funding can be divided into two areas

The financing of the property itself and the financing of the renovation process. Both areas can be financed individually but also in combination. This is decided according to one’s own ideas. There are different types of loans for both options.

Credit types at a glance

To finance the entire project, in principle, all conventional loans can be used. Hard money loans are particularly suitable for the purchase of the property. These are based only on the value of the property, not on the equity.

There are several good financing options for upgrading. Small loans are the simplest solutions. But credit lines are more interesting! These give in principle a budget from which you can take what you need. Accordingly, only the interest is paid and repaid what is consumed.

FIV: I’ll hold on again:

• Purchase financing
• Renovation financing
• Separate or combined
• Regular loans
• Hard Money Loans
• Small loans
• Credit lines

With funding out of the way, there’s not much standing in the way of the upgrading process right?

Upgrading real estate: saving costs & increasing value

IE: Yes, that’s right. Since the process of upgrading is very detailed, I’ll try to be brief and mention only the most important things. We also have complete explanations and articles on our site.

Simply put, this step is about the actual value creation and thus the generation of profit. Here, the property, which is unattractive for the end users, is made attractive. This is achieved through cost-effective renovation measures.

Cost effective is the saying here!

Care must be taken to increase the value effectively without great expense. As already mentioned, extensive renovations are not advantageous.

The best way to increase the value of the property is to replace the flooring, kitchen and plumbing fixtures, new windows and doors, and garden and patio maintenance.

Those who are not skilled in handicrafts will find the best help and advice from craftsmen.

FIV: So the areas where renovation can be effective are:

• Flooring
• Bath
• Kitchen
• Windows
• Doors
• Garden
• Terrace

After upgrading, is the property then ready for sale?

Fix & Flip sale: exposé, offers & home staging

IE: In principle, yes! Already during the revaluation process, an appraiser can start valuing the property. This gives you an approximate idea of the selling price at an early stage. In addition, the preparation of the exposé can also be started promptly and the listing subsequently published.

For the creation there is one more crucial trick – home staging!

FIV: What exactly is it?

Home staging to prepare the display

Home staging is a simple trick to make the living space look more attractive for the pictures of the exposé. In the process, the rooms are made to look alive. For this purpose, no real furniture is used, but specially made cardboard furniture. This saves energy and costs for a “move”.

As soon as the exposé goes on the market you wait!

And when you’ve received enough offers, you compare them and negotiate if necessary to get an even better price.

After the selection of the buyer then follows only the notary appointment and the transfer of ownership.

Finally, the profit can be calculated. For visualization there is the Fix & Flip calculator on our site.

FIV: The sales process is now over. What happens to the profit? Surely it has to be taxed?

Fix & Flip Taxes: How much profit am I left with?

IE: Absolutely correct. Of course, taxes are due on fix & flip profits, just like anything else. What taxes and especially how much depends on the legal form you traded in.

As an individual or sole proprietor, regular income tax must be paid. Depending on how high your profit was in the end is assigned to a certain tax rate.

These tax rates are recorded in the tax progression.

If you plan to operate Fix & Flip for a longer period of time, it is worthwhile to establish a limited liability company. This requires a share capital of 25,000 euros, but you save a lot of taxes. In addition, your own capital is no longer liable but only the company limited to the paid-in capital.

As a GmbH, you then only pay corporate income tax of around 15% and trade tax of 3.5%.

I have now only given rough key data on taxation. Of course, the topic can be further elaborated.

If you want to know more about it, please visit our Fix & Flip guide. Among other things, I can recommend the articles Fix & Flip Taxes, Property Appreciation and Fix & Flip Sales.

FIV: Thanks so much for your time and insights into the Fix & Flip strategy!

IE: Gladly!

Summary: 10 Learnings about Fix & Flip

Let’s briefly summarize the most important points once again.

	Learning Fix & Flip
1	The basic idea of Fix & Flip is to increase the value of properties
2	The 3 steps of Fix & Flip: Buy, Upgrade & Sell
3	Checklist for the real estate search: consider location & condition
4	Find & buy objects via online portals & private contacts
5	Finance project & find suitable financing type
6	Cost-effective upgrading & renovation
7	Avoid objects in need of renovation
8	Have property valued & create exposé
9	Exposé prepared by home staging
10	Settle contract, transfer property & calculate profit (pay attention to taxes)

Yield or investment property: the difference lies in the goal

The direct difference between the two forms of investment lies in their objectives. Depending on how you would like to invest your money, both forms bring you profit. In short, through the return through rent you get a direct cash flow, through an investment property an increase in value takes place in the long term. But what do the terms mean in detail?

Return on property: Constant cash flow

Yield Real estate generates a high rental yield. This means that after all deductions, such as repayment, interest and management, a surplus remains which you can credit to your own pocket. The goal when buying a yield property should always be in front of your eyes:

• Primary: Direct profit through surplus from rentals
• Corresponding rental yield should be guaranteed >6%.
• Properties are located in C+ (higher risks) to B+ (hardly any risk) locations

Investment property: long-term value enhancement

When buying investment real estate, one keeps the goal of value enhancement in mind. The profitable sale of the property at a profit is the main focus, not the income from the rent. The goal when buying an investment property is therefore the following:

• Primary: Increase in value of the property with profit from the sale
• Real estate should be located in A- locations

Advantage yield real estate: Top profit in B and C locations

Investment property requires a lot of capital, since there is no immediate income from renting – ergo no immediate cash flow. It therefore takes years before the property can be sold again at a profit.

What is worthwhile here for the beginning to enter significantly more, are yield real estate.

Yield real estate: advantages

An investment property offers many advantages. We have listed them for you here.

• Instant source of income
• Surpluses can offset other properties with shortfalls

Yield real estate: Disadvantages

However, we also have to note disadvantages here, even if this is the best way for beginners. What they are, read here yourself:

• Surpluses are subject to taxation, tax burden increases
• Higher yield comes at the expense of value enhancement
• Not to be found in A- locations

Excursus A- B- and C- position: Alternatives

You can’t find a yield property for you in an A- location like Berlin or Hamburg? Our tip: Look for properties in B- or C- locations, this will make your search easier.

B- and C- position – Why?

• Real estate search is less complicated
• Moderate prices
• The supply of yield properties is greater here

Here you can learn more about A- B- and C- locations./ Immobilien-Erfahrung.de

Next step: self-disclosure for the bank

You want to buy your first apartment or house and the bank wants a self-disclosure from you? Learn here what a self-disclosure is, what it says and download a free PDF template that you can use to convince your bank!

Investing in watches: 5 tips for buyers

When it comes to investing in a watch, here’s what you should consider before investing serious money in a watch.

The 5 tips at a glance:

1. Choose a brand, max 2, research and learn
2. Look out for outstanding models and collaborations
3. Search for something unique
4. Maintain your watches and contacts
5. Have patience when selling watches

You want more tips? Then read on here:

• Investing in watches

Rolex: Day Date 1803

Data basis and chart from Xupes. More about Rolex watches.

Breitling: Emergency E76321

TAG Heuer: Carrera CV2113

Omega: Seamaster Planet Ocean

Cartier: Must Be Cartiered 2424

More about Cartier watches.

Data basis and chart from Xupes.

Back to the Capital Investment editorial.

Cars: advantages, disadvantages and risk

In addition to the three basic rules of rarity, original condition and patience, the increase in value must exceed the running costs of the value investment car (sport, youngtimer and classic car).

What does classic car actually mean and when is a car a youngtimer? Youngtimers are usually cars and motorcycles that are at least 15 years old when built. At the same time, they must not be older than 30 years. If your car is older than 30 years, it already officially counts as a classic car.

Sports cars, youngtimers and classic cars can be easily obtained and purchased by anyone on the used car market, so getting started is easy. However, it is extremely important to have specialist knowledge. Experience in the field is absolutely necessary, for laymen completely unsuitable and also in the risk medium to high, without knowledge.

Advantage: Increase in value

• Active enjoyment of the object instead of ‘only’ investing in value
• Attractive increase in value

Disadvantage: Only in original condition

• You need a lot of experience and know how for the valuation and purchase
• High research effort for rare models
• Value appreciation only in original condition

Rule for the purchase as an investment

1. Rarity – the rarer the better
2. Original condition – especially for vintage cars
3. Patience – time pressure is counterproductive

The return on cars is medium to high if the appreciation is given by following the 3 rules for car buyers. Where there are high profits, there is always risk, with automobiles as an investment, the risk is high and investments should be made accordingly with planning. Cars are one of the investment objects especially for men, but for laymen the investment in cars and classic cars is unsuitable. We recommend a good alternative, such as funds and bonds. With a little more risk tolerance also real estate.

Reading Tip! The most expensive brands in the world

Tip. The 100 most expensive brands in the world.

1. Rolls-Royce
2. Bentley
3. Ferrari
4. Lamborghini
5. Maserati
6. Aston Martin
7. Bugatti
8. Spyker
9. Pagani
10. Koenigsegg

More on the subject of automobiles?

• Ferrari – Top28: The most expensive models
• Lamborghini – Top10: The most expensive sports cars
• Mercedes – Top10 – The most expensive Mercedes & McLaren

Top 10 Luxury Car Brands

The top 100 list of the World Luxury Association – pure luxury! On Instagram, Youtube, TikTok & Co. everywhere you see luxury travel, expensive handbags, sports cars and exclusive products from jewelry to make-up. But who are the leading luxury labels? We have researched the top lists for you. Luxury goods are not only for personal well-being, in short lifestyle. Expensive products are also seen as an investment, for example handbags as an investment. We have the most important brands in the world for you! These brands promise long-term investment success: Top 10 luxury car brands.

Ferrari dominates top list (6/10)

Did you already know? A car with an increase in value is not only positive for your wallet, it also increases your attractiveness, as can be seen here in a statistical survey. Over 1,000 people were surveyed on the topic: In which type of car does the opposite sex seem particularly attractive to you?

Source: Statista

Car Ranking: Top 10 and Number 1

The 10 most expensive cars in the world

What are the 10 most expensive cars in the world? Ferrari in particular dominates the list:

Ferrari 250 GTO for 48 million

More on that in a moment! At the last auction, the Ferrari achieved the absolute record price of 48.4 million US dollars. Estimated to be up to 70 million by now. Tips, options and prices – more about Ferrari as a capital investment.

1957 Ferrari 335 Sport Scaglietti

Became the first to hit 203.015 mph, currently selling at auctions for up to $32.1 million (last sold in 2016)

https://www.youtube.com/watch?v=JAY-MbBjjSU

1954 Mercedes-Benz W196R

The last one sold at auction for $29.7 million…

1956 Ferrari 290 MM by Scaglietti

Formula 1 sports car with 3.5-litre V12 engine sells for up to $28 million at auction

1967 Ferrari 275 GTB/4*S N.A.R.T. Spider by Scaglietti

300 hp twelve-cylinder for up to 27.5 million

1964 Ferrari 275 GTB/V Speciale by Scaglietti

Rarer than the 250 GTO (the most expensive car in the world, below) with only 12 examples left.

1956 Aston Martin DBR1

Sold for $22.6 million at auction in Monterey in 2017

Le Mans winner 1956: Jaguar D-Type

The 1956 Le Mans winner: Jaguar D-Type won the 1956 24 Hours of Le Mans with a 5 lap lead

1939 Alfa Romeo 8C 2900B Lungo Spider by Touring

The 2.9-liter eight-cylinder sports car out of competition.

1961 Ferrari 250 GT SWB California Spider

Selling price $18.5 million

Source: Driven Luxury Cars

The most expensive car in the world

There are some exclusive pieces on the current car market. There are also some rare collector’s items that many are particularly keen on.

Ferrari 250 GTO in detail

Currently, there is one car that surpasses all others. The most expensive car in the world is currently the Ferrari 250 GTO!

The Ferrari 250 GTO already counts as a classic car. But what makes the 250 GTO so special? The sports car was produced extremely rarely and is still today, there are only 36 copies in the whole, wide world.

At the last auction, the Ferrari achieved the absolute record price of 48.4 million US dollars.

Converted, this amounts to almost 42 million euros.

In 1964 the model was developed.

Engine Start: Ferrari 250 GTO

Cheap alternatives to Ferrari & Co

Only 36 of the GTO were produced, so the model is correspondingly rare on the market. If you’re looking for normal equipment that you can sometimes use yourself, for example for a nice trip on the country road in the summer, there are also affordable models such as the BMW 3.0 CSi and VW Beetle. Both are increasing in value, as is the Porsche 911 Carrera RS. For example, the VW Beetle 1300, built from 1967 to 1973, is gaining 45.5% compared to last year.

Value appreciation BMW 3.0 CSi and VW Beetle

The development in the overall market is slowing down, yet both models are gaining. As Autobild.de reports, “the BMW 3.0 CSi (E9), built between 1971 and 1975, experienced a 46.7 percent increase in value last year,” it continues, “making the sports coupe the classic car with the biggest price increase nationwide in 2018, according to the index.”

Currently, there are only 441 registered vehicles of the 200 hp BMW 3.0 CSi (E9) model left on the market. The market value is “at 70,000 euros (condition 2)”.

It’s a completely different story with the VW Beetle, which is the most frequently driven classic car here in Germany. At the beginning of 2018, “the Kraftfahrt-Bundesamt (Federal Motor Transport Authority) listed 36,528 examples with H license plates in the vehicle register”.

Back to the Capital Investment editorial.

Sports cars: Corvette to Lamborghini

Of course, it’s not always about money, cars have to be fun too! That’s why we’ll finish with a few new models that might eventually become cult objects, like the Ferrari 250 GTO or the Mercedes-Benz W196R.