The Art of Flipping Properties: Everything You Need to Know
House flipping; it sounds exciting and for fast-moving chancers, its potential for profit can prove all too compelling.
But how easy is it to actually make money from flipping a property? And in today’s market, is it even possible?
In this article, we’ll look at the basics every first-time flipper should know if they want to make money and not get their fingers burnt!
What is Property Flipping?
House flipping is buying a house or property with the intention of selling it on for a profit. The simple version of flipping a property would read as follows; you find a cheap home for sale (usually at auction), invest some of your time and money in fixing the property up, and then resell the house for a large profit.
But is it really that easy? Speak to those who are successful at it and they’ll tell you that it’s great fun! But speak to those who didn’t know what they were doing, and they will tell you that flipping properties is a risky business. One bad decision – and you are in danger of losing a lot.
The No. 1 Rule of Flipping
The golden rule of flipping is this, unless you have the money to complete on a property, do not buy it.
You’d be surprised by how many people embark on this process with insufficient funds. Dabbling in property will always have its risks and something you’ll only want to get into with the correct funds behind you. So before you begin, you’ll need to figure out how you will finance your project.
Will you use your own savings? Join with a venture partner? Or even apply for a bridging loan?
When getting into flipping, you should aim to budget for at least the following; solicitor fees, monthly payments for your loan (if applicable), refurbishment, estate agents and tax. These are all factors to consider if you want to break even on your sale. Or better yet, make a hefty profit!
How Much Money Can I Make?
So you know that flipping properties costs money. But how much money can it make you?
Undoubtedly, when flipping properties there is a lot of money to be made. The bigger question is, how will you spend it?
You might make £20,000 to even £50,000 on your flipped property, but you will need to decide if you’re in this for the short or long haul. Do you plan on enjoying the money immediately? Or can this money be invested back into another property? As your confidence grows and you decide to build a portfolio, you may find yourself with a money-maker you can enjoy well into retirement.
Is It For Anyone?
With so much money potentially to be made, you’re probably wondering why everyone doesn’t rush out and start flipping properties today.
One of the biggest reasons is that flipping properties takes patience. Investors can have an inflated idea of what a property is worth, resulting in a long waiting game for the right price. A successful flipper understands that buying and selling houses takes time but that it’s also better to make a profit now, than have a house on the market for months or even years.
I’m Interested! When Can I Start?
Where to buy your property is one of the first questions you’ll have to consider. So a good starting point would be to research the ins and outs of your local property market. Try not to speculate too much about up and coming neighborhoods, but find out where people want to live now.
Another good starting point would be to speak with a professional to better understand your finance options. Also begin building a network of contractors you trust, such as plumbers, electricians, landscapers etc.
The more preparation you put in now, the better.
A Final Word of Caution…
Resist the urge to invest in multiple properties from the outset. If you want to make a success of flipping houses (and you can!), do your research and start small. Similar to any other business venture, flipping properties will require your time, money, patience and practice. But if done correctly, the rewards can be life-changing.
For help securing a loan, why not contact an expert member of our team today? You can call us on 01702 619221 and we’ll work with you to see your plans become a reality.