The “Fix & Flip” model has long been a standard practice in the U.S. and is gaining traction among real estate investors in Germany. The strategy revolves around purchasing distressed properties, upgrading them, and selling them quickly at a profit. Mark Tischer, a seasoned real estate investor, shares his insights on the model and its implementation.
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Rina Wolf: Mr. Tischer, what is the essence of the “Fix & Flip” strategy?
Mark Tischer: The concept is straightforward: we target properties that are outdated and in dire need of renovation – the kind that private buyers usually avoid. We purchase them at favorable prices, have them refurbished by professionals, and then reintroduce them to the market as enhanced, move-in-ready homes. The process involves technical upgrades first, followed by aesthetic improvements, ensuring the final product appeals to private buyers or investors.
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Rina Wolf: What criteria do you use to select properties?
Mark Tischer: Three key factors: price, appearance, and location. The purchase price per square meter is critical since our profit margin depends on it. We often buy “ugly ducklings” with untapped potential for improvement. Location also plays a pivotal role – properties in high-demand, dynamic areas are ideal since quick resale is crucial.
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Rina Wolf: How do you find these properties?
Mark Tischer: We employ diverse strategies. While some rely on digital tools like social media, we prioritize personal connections and our network of real estate agents. Postcard campaigns and direct outreach to property owners are effective methods. Agents appreciate our swift and professional purchasing processes, which helps us access valuable opportunities.
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Rina Wolf: How are these projects typically financed?
Mark Tischer: The simplest method is using personal capital, which enables faster decision-making. Alternatively, co-investors can fund projects, offering a great opportunity for affluent individuals seeking real estate returns without direct involvement. Traditional bank financing is another option but can be challenging for beginners as banks require a solid track record and equity.
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Rina Wolf: Is the “Fix & Flip” model applicable to commercial properties?
Mark Tischer: Not really. Commercial properties are often too specialized and lack the scalability needed for this model. Additionally, finding buyers or tenants for such properties can be a lengthy process, which undermines the fast turnover required for “Fix & Flip.”
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Rina Wolf: Why is real estate flipping more prevalent in the U.S. than in Germany?
Mark Tischer: Americans are more open to risk and frequently relocate. Additionally, transaction costs are lower in the U.S., and financing regulations are more flexible. Transparency also plays a role – U.S. property ownership and mortgage information are often publicly accessible, making deal sourcing much simpler.
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Rina Wolf: Do you see a future for real estate flipping in Germany?
Mark Tischer: Absolutely. However, beginners must approach it with care and expertise to avoid costly mistakes. Many private investors use this strategy to generate profits, which they reinvest in long-term rental properties. That’s the same strategy we follow – reinvesting our “Fix & Flip” profits into a growing portfolio of rental properties.
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This interview has been edited by the ERENA Editorial Team for clarity and readability.
