So you want to get started with property flipping but don’t know where? Well, by reading this post, you’re already taking one step in the right direction.
What is property flipping? It is a real estate investment strategy where an investor acquires a property with the intent of selling it as soon as possible for a big a possible profit. This can be a very powerful strategy if you know what you’re doing and what to look out for.
Below, I have put together my 5 tips on flipping properties for profit.
1. Do your research thoroughly
This is probably an obvious point but this could be the most important point.
As it is with most things in life, you have to do your research before you take on what you’re about to do. If you’re looking for a car, you’re not going to buy the first one you see. No, you’re going to read forums and go and look at different cars before you spend all that money.
The same goes for flipping a property. You should know your areas and what the current market values are for the type of house you’re looking to buy. Try and find out what the surrounding properties are selling for. This way you will know more or less what you will be able to get if you sell in the same area.
Another thing you have to do is, ask yourself if you will be able to find a buyer in the area you are looking. Is there a lot of crime in the neighborhood or is it far away from schools? You’ve got to know what you’re dealing with.
You can check out my post to find out more about what to do before you buy a property.
2. Buy below market value
If you want to be flipping properties for profit then you have to know how to buy below market value.
This tip goes together with your research. Just think about it. Say you are buying a property with the intent of selling it for a profit and you pay market value for it. Now you want to do a bit of revamping and perhaps an extension here and there. This will set you back a few dollars and you will most definitely not be making a profit. The value of the home will increase, yes, but not enough to justify the amount spent.
Buying below market value is a crucial step and very difficult. To do this, you will probably buy a house that needs a bit of TLC or property on an auction. Whoever, buying property on auction is not for the faint-hearted and there are quite a few things to remember. I will discuss this at another time.
3. Make sure you know about all the costs involved
The biggest mistake you can make is not doing your calculations correctly. This means when you’re doing the calculations for the flip, make sure you include everything.
A lot of people think flipping a property is just buying the property, doing renovations and selling it. This is a general mistake that is easily avoided. Costs to remember when your flipping property include cost of property, conveyancing costs, bank fees, holding costs, real estate agent commissions, tax and renovation costs (if applicable).
Adding up all these costs could mean that you won’t be able to flip the property for a profit. That is why it is important to do the calculations correctly and make sure you cover everything.
I found this cool post showing in detail the costs involved when flipping a property.
4. Build relations with the right people
When flipping property, the chances of you doing renovations are pretty good. And for renovations, you’re probably going to need a builder or construction worker (if you are not in the construction industry).
This is why you need to build good relations with the people that can help you. This includes Architects, Engineers, Conveyors, etc. If you’re planning on doing more flips in the future and you are able to give these new “business friends” more work, chances are very good that they will be able to give you special prices.
Remember, the less you have to pay, the more is your profit.
5. Use a real estate company when selling
So you’ve acquired the property, did some renovations and you’re ready for selling, what now?
Well, if you’re not a real estate agent or some kind of marketing expert, I will strongly suggest that you make use of a real estate company when selling your property. Yes, you are going to pay them a commission, but in my experience, this is so worth it if you see what they do in order to get the sell.
Real estate agents go through a lot of trouble to sell a property. It is after all how they earn their money. If they don’t make sales, they don’t make money.
Normally they will take the photos of your property, post it on all the major sites/newspapers and handle the entire sale on your behalf. This means you have more time to do research for your next property. For me, this is absolutely worth it and helps to make the whole process a bit less stressful.
In conclusion, flipping properties for profit can be a frightening task, but if you do the necessary preparation, it can be much easier. If you follow these tips that I’ve set out here, you’re one step closer to making money with property.
If you have any queries or have something to add, don’t hesitate do leave me a comment or contact me via email.