It’s an appealing idea. Buying a property for peanuts, spending a few thousand making it more presentable and turning a quick profit by selling it within 12 months. It’s also a trend that has been gathering pace for some time now in the UK as more and more people have seen the opportunity the property market presents.
It’s all thanks to a general shortage of housing which has made it definite seller’s market with more demand than can be satisfied by the available properties.
However, a mistake that many first-time flippers make is to assume that they will automatically make a profit, and many have fallen foul of this assumption.
Essentially, there are three elements that need to be in place for a successful house flip:
- Buying the right property at the right price
- Keeping a tight control of refurbishment costs
- Being able to find a buyer soon after the refurbishment’s complete.
So, let’s take a look at these one by one.
Choosing and buying the property
Obviously, the real profit is going to come from buying a comparatively cheap property which has potential for increasing its value through making cosmetic rather than major structural changes.
It also needs to be in an area where there is likely to be demand when the time comes to sell – and the greater the demand, the better.
One of the most popular options to find these kinds of properties is at auction where there may be places that have been repossessed or which would struggle to find a buyer on the open market. While this means the prices will be lower, it’s worth adding a note of caution here.
You’ll be buying something of an unknown quantity which may have many more faults than first meet the eye. So see if it will be possible to take a builder or other structural expert to assess the place before you commit.
The second consideration is to set yourself a budget for the purchase and stick to it. It’s all too easy to get caught up in a bidding war on the day – and that will cut into your profit.
If you’d prefer a more “traditional” route to purchase, then it’s well worth going round estate agents in your chosen area to see if they might have any suitable properties on their books. If there’s a particular street or area you’re focused on then door-to-door leafleting might prove successful in flushing out potential sellers.
Let’s assume it’s only cosmetic changes that you want to make. You need to make the property look like it’s 100% ready to move into.
So check out the most current trends for decoration and furnishing and use these as guidelines for what you’re going to do.
There are also some key areas of the property to focus on. The kitchen and bathroom are two very obvious ones. But you shouldn’t forget about the bedrooms either.
As well as decorating these, don’t forget about the furniture. So make sure that there is enough storage space and that the bed itself looks appealing to any possible buyers. Somewhere like the Divan Beds Centre would be the perfect place to source and buy just the right kind, at the right price for your budget.
On the subject of budget, it’s keeping a close control of this that is going to be critical to whether or not you turn a profit. Many would-be flippers have made the mistake of underestimating the amount needed to get their property to a saleable condition. So make sure you’re not one of them.
You’ve done up the property, it’s ready to go on the market. So it’s a question of finding the cheapest way to sell it effectively and quickly too. This will depend on a number of factors including location and the general state of the market.
But take a balanced view, and follow the advice of experts like local estate agents, and you’ll soon be on your way as a fully-fledged and successful flipper.