How to Flip Properties for Profit the Right Way
While flipping properties might seem like a fad, savvy real estate investors have been using this method way before it hit the mainstream. Unfortunately, too many get in this space without doing their research. While the buy-to-sell model is often great for new investors, it’s easy to make mistakes that could end up sinking your project and wasting money. But there are a few principles all investors can follow to increase their chances of turning a profit. Here are a few tips on how to flip properties the right way.
Search for the Worst House in the Best Neighbourhood
This is one of the most valuable pieces of advice that you can get when looking for potentially profitable properties. Don’t buy a rundown property in a rundown neighbourhood. No matter how you fix the property, it will always have a limited scope for value as it can only go as far as the area. But if you buy a bad house on a good street, there is a lot more potential.
You’re going to make the most of your profit based on the purchase price, not what you end up doing to the property, so make sure that you pay a reasonable price for it. Unless you’re thinking of buying something big, the margins can be very narrow, so be careful. You also want to go for a property that has a lot of potential, but hasn’t caught the attention of other investors yet, so make sure you know how long the house was on the market.
Know Your Limits
While you may be tempted to do as much as you can yourself, unless you know what you’re doing, think twice about doing things like electrical and plumbing work. It would be better to work with a maintenance or handyman service. You could also build a relationship with them if you end up buying a lot of property, and save money that way.
Companies like Regional Services, for instance, offer maintenance and handyman services, and can handle everything from plumbing work to painting, and decoration. They also deal with things like pest control, which may be something you’ll have to deal with if you buy old properties. They also do bathroom and kitchen refurbishment, which could help add to your property’s value.
Take Care of the Essentials
Before you start with big projects, you have to make sure that you set money aside for the important things. You may do some renovations, and these could indeed help boost your property’s value. But a valuer will bring you back down to earth if there is some important work to be done, like rewiring for instance. So, if there are some wiring issues, issues with the roof, or other important things like insulation, you’ll have to factor these into your budget.
Work on the Small Things as Well
You also have to make sure that you look at the small defects. The good part here is that you’ll actually be able to do some of the work yourself. Things like chipping paint, a broken latch, or mouldy sealants in bathrooms and kitchens are all things that will turn off prospective buyers and can be easily fixed. So, make sure that you look for any kind of minor defects and fix them.
Consider Adding Central Heating
There are some things that will invariably add value to a property, and adding central heating is one of them. Most mortgage valuers and buyers view it as an essential, so chances are you’ll be able to recuperate on installation cost upon sale. However, you also have to make sure that you improve the overall energy efficiency of the house as well.
Don’t Just Renovate, Remodel
In addition to renovations, you could also give a second life to certain rooms and transform them. For instance, a basement or a garage could always be turned into an extra living space. If you’re going to extend, consider extending up or down as it will usually be easier than on the side or the back. And you won’t have to sacrifice garden space either.
Know that There Will Always be a Limit
There’s always a limit to how much you can add value to a property, so you have to know when to stop. If you want to know what you can expect to make with your house, you can check out sites like Zoopla or Rightmove and see what the highest selling house in your area was able to sell for. While you might be able to break this price by a little bit, don’t expect to get substantially more.
All these tips will allow you to find a great property with potential, and hopefully, turn a profit. Make sure that you avoid beginner mistakes at all costs, and speak with an agent who will be to guide you and show you the ropes.
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