Investing in property, especially for resale or house flipping, requires a certain degree of knowledge and skill. While house flipping sounds quite easy on paper, this process is not as easy as it seems. The whole point of house flipping is to invest in a property, flip it to make it worth more and sell it for a higher value. House flipping has been around for quite a few years now, but this select skill of successfully flipping houses for a profit is known to just a few. After speaking to estate agents in Leeds as well as some house flipping experts, here is everything you need to know about house flipping and how to get the maximum return from it.
First and foremost, let’s talk about what house flipping means. House flipping is more than just buying a house at a low price and selling it for a property. While the whole concept of house flipping revolves around that, it is far more than just selling a property for a profit. Essentially, when you decide to flip a house, you buy a property at a bargain or a low price, then you invest money in refurbishing and remodelling the place, which then increases the value of the property, and then you sell the property for a profit. While there is no technical time constraint for flipping a property, the general consensus is that house flipping is based on the idea that the purchase, refurbishing and sale of the property are made quickly so that investors can move on to their next house flipping project.
Let’s assume you buy a house in the suburbs for £130,000 and you put in another £20,000 to refurbish and remodel the property, do up the interiors, thoroughly clean the property and then stage it professionally to attract potential buyers. Now that the property looks and feels brand new, you as an investor can ask for £170,000 for that very property, thus earning an easy profit of £20,000. However, the only way to earn money from house flipping is if you stick to a tight budget and plan properly. Here are some tips to get the maximum return from house flipping.
Find the right property to flip
If you look at conventional properties that are available in the market, you might not be able to earn a very high profit. Instead, try to find properties at online auctions and auction houses, speak to local estate agents or local investors to help you find a good deal, walk through upcoming neighbourhoods to spot a for sale sign in the yard or get in touch with your sources to help you find a good bargain.
Create a budget and stick to it
How much money do you want to spend on buying the property? Now, how much money do you want to spend on refurbishing and remodelling the property? How much will renovations and repairs cost? What can you do to add value to the property without burning a hole in your pocket? What is the maximum amount of money you can afford to spend on buying and flipping a property, and what is the minimum amount that you will accept as the selling price? Once you have figured out your budget, stick to it.
Understand your potential buyer
If you understand buyer demand and figure out what kind of buyers you are looking to attract, you will be able to decorate the property in a way that will attract potential buyers. For instance, if you are thinking of flipping a property to sell to a family, then you’re going to want to invest in a three or four-bedroom house, create bedrooms for the kids, spruce up the master bedroom, remodel the kitchen and maybe create an outdoor patio for family lunches. By doing so, you will be able to attract a whole lot of potential buyers.
Know your exit strategy
For one, are you buying this property to flip, or are you interested in giving out the property for rent? You need to remodel and refurbish the property accordingly. What happens if there is no buyer interest in your property? Will you agree to sell it at a minimal profit or would you rather give it out on rent until the price increases? These are things that you need to figure out before you start flipping houses to maximise your future returns.