To start, let’s explore what is property flipping in the first place? It is an investment strategy in which you purchase a property, increase its value, then sell it and benefit from the profit. Make sure you understand the fundamentals of real estate pricing, before buying your first investment property to flip.
There are three factors that need to come together for the perfect flip target:
- The right area
- The right property
- The right situation
You want a property to sell quickly and you want people to bid seriously on it, so you want it to appeal to the largest number of buyers. Here are a couple of different ways on how you can flip a property:
This typically includes decoration and some upgrading. This can be ‘cosmetic renovations’ (such as painting and decorating). Turning an old-fashioned house to a modern type property can be an eye-catcher, because people want to get a house and live in it immediately, saving them time and energy. Bringing a property up to date will add instant value, especially in kitchens and bathrooms, which are rooms that buyers tend to focus on when looking around a property.
Changing the internal layout of the property, this includes major repair work and alterations, such as installing a new kitchen or a bathroom. The main advantage of a full refurbishment is that the property will be available to sell or let in a short amount of time. Most house-hunters are happy to move in straightaway, rather have a lot of things to repair.
However, you have to choose your contractors well. Far too many contractors try to raise the project’s price on you halfway through a house flipping renovation. If you’ve never worked with a contractor before, call as many references and past clients as possible.
Adding an Extension
Now, you may have been considering home extensions. They are often touted as a well-known method of increasing property value. You can expand the size or square footage of the property.
Changing the Use of the Property
A great example for this is changing it from commercial to residential or vice versa, however, this may require planning permission. You should also consider the location and determine your target market.
Splitting the Property
This usually increases the value of the land. When the land is subdivided into more than one lot, each lot is then sold to one or more buyers. Splitting the property into more properties, typically means turning a large house into apartments.
The strategy is adaptable to investors in different stages of their journey and in different risk areas. Tycoon investors may do a full refurb or extend the property, while newbie investors may begin with light renovations. House flipping is a great way to make money from property fairly quickly, but it involves finding the right opportunity, financing the deal, getting the numbers right, and executing to perfection.
Sourced have training in flips and refurbs for franchisees and our support people will ensure you succeed. Franchisees also get property leads to help them find properties suitable for different deals. To To find out how Sourced Network franchise can help you on your property journey, download our prospectus now.