How to Successfully Flip a Property
Flipping houses for profit is becoming very popular today. This is possibly the result of multiple TV programs which make the entire process appear quite simple! However is this really the case?
While there is no doubt that many savvy property gurus have made a small fortune flipping houses, many have also failed to generate a profit.
So how can you avoid your flip becoming a flop? Below I have listed the key points to follow when renovating for profit. Thorough research and extensive knowledge into the following areas can ensure your success in the house flipping game.
It is extremely important to research the area where you plan to buy a property. Flipping is more than simply selecting a cheap property, renovating it and making a profit. You may find that a property is low priced as it is in an undesirable location. If this is the case, there is even less chance that purchasers will buy a more expensive property in that area once you have completed renovations. Research areas in depth so that you are aware of the value of properties in certain locations. This will assist you in determining a great deal when it pops up.
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Select the Right Area
Set your sights on thriving areas. Drive through the neighbourhood to determine if the houses and gardens are well maintained which will give you an idea if the location is a desirable place to live. Ensure that the property is close to amenities such as shopping centres, education and parks. Close access to the freeway and train station can also increase the value of the property.
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Buy at Reasonable Price
Once you have found a suitable property it is time to begin negotiations. Be confident in your ability to haggle with the real estate agent to potentially to drive the price down. Keep in mind that if you can obtain the property for a lower price, you will have more room for profit.
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Begin with a Small Property
Smaller properties result in a smaller outlay. Begin your house flipping journey with an affordable property as these are less risky that larger properties. We are all bound to make some errors which we can learn from when we begin a new journey. However, these errors tend to be much less costly on a smaller, less expensive properties.
Once you have some experience under your belt, you will feel more confident in tackling some larger renovations.
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Negotiate a Long Settlement
If possible, try to agree on a 90 day settlement period. This gives you time to finalise designs and arrange trades and suppliers. Once your property has settled, you will begin paying interest on you loan. As a result, it is much more cost effective to make preparations prior to settlement.
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Work to a Budget
Having a budget is absolutely essential if you plan to make a profit. Every expense must be accounted for if possible. This will avoid costs becoming out of control and eating into your profit. If you work closely to your budget and ensure that you do not overspend, there is a much higher chance of your flip becoming a success. Be sure to allow for interest, real estate agent fees and of course, some unexpected costs which may arise during the renovation period. These may include unanticipated repairs.
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Complete Practical and Cost Effective Renovations
Keep renovation costs to a minimum. Avoid costly jobs such a structural changes to the property and stick to more simple, economical renovations. These may include a fresh coat of paint and new carpets. Bathroom and kitchen renovations can also been completed on a budget. Head to my previous blog, Secrets to Achieving a Stunning Renovation on a Budget, for further details.
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Focus on Your Target Market
Keep your target market in mind at all times while completing renovations and tailor the property towards that particular market. For example, if you are renovating an apartment in an area occupied by many wealthy professionals, they may appreciate a low maintenance space with high end finishes. On the other hand, families with children may be keen on a spacious, uncluttered backyard and reasonably sized living areas.
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Maintain the Period of the Home
Several times, I have seen gorgeous Victorian homes completely renovated in a sleek, contemporary finish. While contemporary design is breathtaking in the right property, it does not maintain the theme in some older style homes. For a superior result, determine the style of the property and maintain this throughout the entire home to avoid a disjointed appearance.
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Sell at the Right Price with the Right Agent
Your budget will determine the right price to sell the property in order to make a profit. Choosing the correct agent will assist in obtaining the best price for your property in the shortest amount of time. Selecting the busiest agent in town does not necessarily guarantee a fast sale. Opt for an agent who is very familiar with the area, has a good reputation and is truly keen to sell your property. Ensure that your agent can arrange professional looking photos to advertise your property as this is vital to the sale of the home.
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Successfully flipping properties does require careful planning and the correct knowledge, however it is definitely possible. If you are eager to begin your house flipping journey, start from the top of the above list and begin conducting some research into some different locations. Who knows where this exciting adventure may lead you!