Flipping properties is a process in which a real estate investor purchases a property, usually for a low cost under actual value, makes the necessary repairs and resells it with profit.
There are two types of houses to flip, fixer-uppers and foreclosures. You can also just resell a property without making any changes but it’s a risky attempt as it’s mostly out of your control.
Term flipping became popular in late 1990s and early 2000s with popularization of certain TV shows like “Trading Spaces” and “Extreme Home Makeover”. Home improvement shows like “This Old House” made it seem like remodeling and repairs are fun to do and most importantly fun to do. Flipping shows like “Flip This House” and “Flipping Out” showcased that it can be done in quick fashion with a very dramatic twist that was enjoyable to watch. At this point in time, term flipping is considered extinct as it implies quick profit which doesn’t actually happen in a flat market.
Things to look out for before investing
When trying to flip, you should look for a minimum of 20% profit. That is after all the investment added to the down payment. So naturally you should set a budget with that in mind. Repairs and Updates can take up to $10.000 in addition to the house’s original price.
It is also very important to know that buying an old house and making it good is a much better investment rather than buying a good house and making it a premium one.
Flipping a house is a different situation to buying it for your own family. You should always consider your ideal buyer in mind when you are remodeling the house. Not everyone has the same taste so going for something bland will appeal to more people. If lots of people like your house, chances are high you will sell it faster and for more profit!
Last and possibly most important thing is the neighborhood. Make sure the criminal activity is low in the area, check personally by driving through the area once or twice, during the day or night… Finally, check if there are other houses available for sale, compare your price with theirs and make the decision accordingly.
London
London is considered rather expensive for the most part, rent doesn’t meet the mortgage, deposits are huge and there is a lack of income after costs among other things. Even so, it has a lot of popularity because the demand is high and the sales are quick…
Key part of flipping in London is location; you don’t have to buy in Chelsea, but other significantly cheaper areas. With the population increasing, most people are looking to live outside the city centre and travel. Some of the areas to keep in mind are Leyton, Abbeywood, Thamesmead, Plumstead and Erith.
Interesting part of flipping in London is rent-to-rent. If you rent a 3-room apartment for let’s say £1000, and then sublet each room to a tenant for £500, you basically have a profit of £500 (3×500=1500-1000=500).
Fixer-uppers
While you can make a house out of nothing or trade the foreclosure you bought for a decent chunk of money, it is considered best to improve the fixer-upper’s state and resell it that way. While they don’t look much, they appear can be vastly improved with just a few simple adjustments.
Always make sure to maximize your effort. If you are not satisfied with the house, your buyers won’t be either. To make a house good, it’s important to fix more than just the looks. It doesn’t matter if the paint is splendid if the woodwork has termites…
When improving fixer-upper, most important parts to fix are the kitchen and the bathroom. You can redo the sink, buy new apparatus, dishwasher and other utensils and appliances. In the bathroom, check the tiles, boiler, and bathtub while also making sure there are no leaks.
Exterior
Best way to make a house looks appealing is her exterior. And best way to fix that is with a lovely looking garden. You can do it yourself, ask a family member or simply hire professionals. Leading Garden Maintenance Companies from London can do it for cheap. A garden in itself is not enough though. Make sure the fences are in order, driveway is polished and that the house is pleasing on the eyes.
Potential risks
Flipping properties is considered a risky investment that requires thorough research. Even if you do all the work, fluctuations in market values can still turn the tables on you. A bad investment will do you much more harm that apparent. Not only your work and time would be wasted, but your funds will be blocked in a real estate with no way out.
Conclusion
House flipping is by no means an easy task. It takes time, knowledge, skills and a bit of luck. It is a risky investment and should not be your main source of income, at least not till you get a hang of it. If you check wealthiest people anywhere, you will see that none of them are house flippers.
