21 Jul Top tips for flipping a property
Property flipping is a term used when someone buys a property below market value, renovates it and then quickly sells it on, making a profit. While there are a few risks associated with it, namely that the renovation costs could spiral, it typically provides a number of benefits if you do have enough money to spare. Plus, whether you’re new to the property flipping game or are a seasoned pro, we round up some of the best tried and tested tips for flipping a property.
As with any property purchase, we recommend everyone to carry out a little research. Location is always important – especially if you want to flip your property well. Look for areas that are in high demand such as those close to the city, good schools and public transport systems. Then, you could try and find similar properties that have been done up in the area to see roughly how much they increased in value.
During this phase, it’s important to weigh up what sort of property is going to do well. For example, a small apartment close to a school might not do as well as a three-bedroom family home. Flipping properties is all about adding value so when you do view properties look for their potential. Is there space to extend? Could a wall be knocked down? Would another en-suite add value?
It’s not just as simple as buying a property, painting the walls and selling it on again. You need to have a strategy that includes timelines, contractor plans, and budget. It might not be feasible to get cracking with every room in the house so make a plan for the first few weeks, months and then longer-term.
On the topic of budgets, it’s crucially important that you keep an eye on this. You also need to plan for worse-case scenarios and ensure you have extra in your back pocket. It’s not just material and labour though, as you also need to budget for legal fees, surveys, and any other broker fees involved in buying and selling properties.
Speak to a professional
Unfortunately, traditional mortgages aren’t suitable for flipping properties and usually bridging loans are a better option. While they can be arranged quickly, there’s a few things you need to do to ensure that you’re not in breach of your lending contract. This includes letting the lender know about your project timeframe. For this reason, it can be useful to speak to a specialist mortgage advisor so that you know exactly what’s involved. At Kaytons, we even have a recommended broker that we’d be delighted to introduce you to.
On the topic of getting advice, it’s also wise to discuss current market conditions with a local estate agent. After all, you want to know that you’re buying the right property for the right price. That’s why some people use the 70% rule – what you purchase the property for should be no more than 70% of the expected property value after renovation minus any costs. While this does depend on the market at the time, an estate agent like Kaytons will be able to advise.
If you have any questions about flipping a property or want to see what we currently have on our database in Manchester, don’t hesitate to get in touch. Alternatively, the doors to our Chapel Street office are always open and we’d be delighted to hear your plans.