Flipping can be a fantastic way to make money from property in a short space of time, but it is not without its pitfalls and, if you get your numbers wrong, your flip could turn out to be a flop.
Also referred to as trading, fix and flip or buy to sell, flipping a property is simply buying at once price, then quickly selling at a higher price to make a profit.
In order to do this, there needs to be some reason to justify selling the property at a higher price. Capital growth is excluded due to the purchase and sale occurring only months (or even weeks) apart. So refurbishing the property is normally part of the flip process.
The latest estimates are that ‘flipping’ in the UK has reached a 12-year high, as it seems coronavirus isn’t stopping savvy Brits from trying to make some money.
But to make home flipping worth your while, there are some factors that need to be carefully considered. To guide those looking to give it a go, MyJobQuote.co.uk gathered tips with the help of property experts to reveal how to flip a house quickly and profitably.
1. Use the BRR technique – Buying, Refurbishing, Refinancing
According to private equity entrepreneur Abdul Shakur, BRR investing is finding a property you believe you can add value to with a minor refurbishment.
Instead of buying it through a full mortgage, the buyer applies for a short-term loan known as a ‘bridging loan’ which means they may only need to pay 25% of it – the rest is paid by the loan.
The buyer renovates as they wish, and if done to an acceptable standard, when selling they can refinance the property or sell it to someone else for a much bigger profit.
2. Understand your demographic
Especially in the current climate, buyers’ demands are rarely the same. Before buying the property you wish to flip, think about who you want to sell to and what the property could offer a buyer once improved.
What’s just as important when identifying a target audience is conducting market research to work out what competition there is in the local area. Nailing this allows you to make faster and more cost-effective decisions when renovating.
3. Say hello to home staging
“Many people struggle to separate home staging from interior design,” says Elaine Penhaul, owner of home staging company Lemon and Lime Interiors. Although many tend to neglect the former, “return on investment is undeniable” as on average home staged properties sell for a higher price and four times faster.
Research and stage a property based on what will attract the widest target audience, and you’re likely to strike gold!
4. Declutter and decorate
Decluttering and decorating are among the most important stages in the flipping process. If you’re wanting to make a quick sale, chances are the buyer is also wanting to make a quick purchase.
Whilst most buyers will see past clutter and won’t base their decisions on it, it can drastically slow down the process and provide them with reasons not to buy. Removing unsavoury items smells and redecorating (even if slightly) will revitalise the property and highlight the bits they should focus on and detract from what they shouldn’t. Speaking of which…
5. Promote the property’s best bits
Just like applying for a job, highlighting a property’s best bits will make it more likely to sell. Whether you were problem-free when renovating or riddled with issues you didn’t realise were there, focus on what’s good about the property and remind the potential buyer how they can enjoy it once moved in.
Emphasising the best bits when marketing the property online can also go a long way, as online property viewings are only increasing. It’s important to make all rooms and features look beautiful and enticing, so investing in or arranging professional photographs to be taken will significantly contribute to your success.
*Content Courtsey of Property Reporter*