How to be successful at finding, fixing and flipping properties.
A growing number or Australians are focusing on making money by ‘flipping property’. If you haven’t heard this term before, according to Property Investor Today;
“House flipping (also known as 'fix and flip', 'property trading' and 'fix to sell') for profit is a simple strategy. You find a property that is in need of renovation and you purchase it for a low price. Then you renovate the property to make it a lot more attractive to buyers and sell the property for a higher price”.
Despite the costs involved in buying and selling property, by sticking to a few simple rules you can make a fast profit every time you flip a house.
Buy below market value
Aims to purchase properties for about 20 per cent below market value. While that may sound ambitious, some vendors are prepared to take less in order to achieve a fast, fuss-free sale.
Most properties are not sold at such a discount, but do your research and seek out those homes where the vendor is motivated to sell quickly.
One good way to do this is by looking for listing that have been on the market for extended period, the seller most likely had unrealistic expectations on how much their property was worth and as time goes on they are likely to get desperate to sell, especially if they have bought elsewhere.
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Cosmetically renovate – and fast!
The three hot spots in any home are its street appeal, kitchen and bathroom. If you can easily upgrade or improve those, you’re on to a winner.
Time is money so only ever purchase properties that can be simply improved in around three to five weeks. And never do anything structural, stick to existing layouts in kitchens and bathrooms to keep the costs down.
New paint, new blinds, new lights, new flooring, new shower screen and vanity … you can give a home an enormous facelift with a well-planned cosmetic renovation. Being quick about it means you minimise hold costs and you’re not exposed to unforeseen market downturns that can dampen your profits.”
DIY and upstyle
Aim to DIY as much as possible and also style every home you renovate with furniture, artwork and accessories so that it looks as fabulous as possible. Styling is the secret ingredient to achieving both a fast sale and a premium price.
Buy just above the lower end of the market
Working at the low end of the market is risky when it comes to capital gains. However, if you go slight above this level, you’ll be able to capture buyers who are looking to upgrade from the lower end as well as investors who want to buy well presented and highly rentable properties that’s not going to cost the same as their residence.
You’re also appealing to buyers who don’t expect granite bench tops and other high-end fixtures and fittings, which means you can upgrade the property more cheaply.
Build a good team around you
Built up a reliable team of tradespeople you can call upon as soon as contracts becomes unconditional. Try to negotiate access to the property for your carpenter before settlement, so he’s ready to start the day settlement takes place.
Be realistic and do your research
Be conservative with your numbers. Never inflate what you think you’re going to make. Make sure you do your research and know what properties in the areas you’re targeting are really worth prior to committing to a project in that area.
Although house flipping requires a can-do attitude plus diligence and careful planning, those who’ve done it say success is more than possible.
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This article does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.