Top Tips For Property Flipping!
I previously talked about achieving an extra 12% premium for your property value through modern design. I wanted to expand on some tips for those of you entering into the development market.
I often have budding new property investors into the office every week – all looking to start off a property related career, but there is more than great design to achieving your goal in property flipping.
I won’t go into too much depth of property development here, but if you need more complex help or property market intelligence please feel free to contact me.
So, you have made the decision that you want to buy a property that needs work and turn it around to make a profit. So firstly;
- Know Your Market
Do not envisage selling a property for £450,000 when other similar local properties sell for £250,000. Do your homework – you want to buy the property at the lowest cost and sell for the highest, naturally, but know what the ceiling property values are for the area. Do you want to take the property to the ceiling and sell for maximum price or quickly turn the property around with basic upgrades? Use property market intelligence to determine these details.
- Understand Your Finance Options
There are many difference ways to finance your project – if you are wanting to make this a career then make good friends with a finance broker / advisor. Not all projects work with the same type of finance and knowing your options could save you thousands.
Learn and research your budget spending for the refurbishment – it is very easy to overspend, and this can be dangerous. Stick to your budget and try to consider any problems you might encounter.
- Refurbish To Sell
Remember you are upgrading the property to sell and make a profit, so it is vital to know your buyers and what they want. This may not necessarily be what your own personal style is.
Are you considering doing some or most of the work on the project yourself? Either way it is highly likely you will still need good reliable tradesman ready. Build good relationships with your contractors as they can be crucial for you being successful in property development. Brief them on the project beforehand and ensure timescales are adhered to. The cheapest contractors will not necessarily help you achieve the greatest profits.
- Home Staging
Consider dressing the property ready for sale. Prospective buyers form an opinion of your property within the first 10 seconds of stepping in the front door, so making a good first impression is vital. Although you may have the ability to view how an empty property could look when full of nice furniture, your prospective buyers probably won’t. I have seen some poor attempts in my time, so use a professional home stager as they know what works and what doesn’t. Research has shown that properties staged well sell faster and can sell for up to 17% more.
- 20% Rule
You will roughly be aiming as a rule of thumb to achieve 20% return. Anything that you are happy with can be a good result, however there is logic to the 20% return on investment. The idea being that if you aimed for a 10% return and slightly misjudged you could end up making no money at all. So, if you aim for about 20% and the project doesn’t go exactly to plan you can still make a profit. I recommend the rule of 3 – Try to be realistic, work out a “best case” scenario, a “likely” scenario and a “worst case” scenario
Above all try and enjoy the experience – this can be stressful and time consuming so try to take the positives from the project. It will undoubtably be a learning curve.