Sounds easy when other people talk about it doesn’t it? How well they do it, how much money they make, but nobody tells you that although it can be done, it isn’t that easy unless you’ve done your research.
We’ve broken the process down into seven easy steps to follow should this be something you are keen to explore further, it most definitely helped us!
A simple one but a very important one. Having an in-depth knowledge of the area you’re about to invest in is key.
You know the saying “It’s better to have the worst house on the best street than the best house on the worst street?” well, it’s so right. Your immediate location has a huge effect on your selling position.
Carry out comparables on similar properties in the area and how much they are selling for to understand how much potential profit you are set to make.
Are two bed homes selling quicker than 4 bed homes? Keep asking yourself these questions along the way to ensure you’re on the right track.
Take some time to understand where house prices may sit in the next 12 months and what new developments are happening within the area to increase the cost of properties. It would be worth including the locations surrounding areas as well to get a bigger picture of what’s going on.
2. Finding the right property
To find the right property, taking a walk or a drive through your chosen area is an absolute must!
Making friends with local estate agents, brokers or other professionals is also high on the list of things to do – sometimes it’s who you know, not what you know.
Reaching potential home-owners by direct mail is a popular one, particularly for properties that may be run-down and in want of a quick sale.
3. Does the deal stack?
You’ve found a property in a location you’ve researched and are happy with. Now it’s time to make sure it’s a good deal.
Taking a detailed look round the property is vital, and it may be worth bringing a contractor with you to tally up potential costs along the way and pick up any hidden costs.
The ultimate goal of pursuing a flip property is to make sure the profit gained is not only higher than the original purchase price, but higher than the purchase and total renovation costs.
Figuring out how to pay for the flip property can sometimes be a challenge. Some lenders won’t lend on properties in poor condition but there are many other options available so make sure you shop around. Bring your previous networking into play here, someone you’ve met with in the same market place will be able offer a referral. Make sure you are considering three main things here – interest rates, terms and speed of funds.
5. Power Team
You will likely work with a number of contractors, inspectors, solicitors and appraisers and building strong working relationships with these people will be key to getting your property flips completed quickly and professionally. These people will make up your Power Team. Even if early on you don’t have a project to work on, offering a contractor a coffee and a catch up to pick their brains and increase your knowledge is invaluable.
6. Property renovations
Don’t now leave it to your contractors to get up to speed, it’s important you are still very involved to ensure work is carried out in a timely manner.
Check in with your contractors on a weekly basis and give clear instructions, don’t get involved if you’re not skilled to do so, as much as you think you’re helping, it’s likely you’re just getting in the way.
7. Selling the property
Finally. The end is here. There isn’t any difference to selling a flip property to any other property on the market apart from money. The longer it’s on the market, the longer it is you’re not getting paid. Depending on how you’re carrying these costs, your profit may be lower at the end.
Good luck in moving forward with your flip property adventures!