Ready to make a flipping profit?
Are you thinking of doing up a property to sell on for profit? VICKY SHAW gets a few tips from the experts
RENOVATING a ‘fixer-upper’ home can be exciting and financially rewarding – and it seems many people have been having a go.
Estate agents Hamptons recently found that ‘flipping’ – where a home is sold twice within 12 months – had reached its highest levels since 2008.
Tempted? Remember, while there are no guarantees of returns when fixing up a home to sell, there may be ways to minimise the risk and cost.
Here Sam Mitchell, CEO of online estate agent, Strike.co.uk, offers advice.
CALCULATE THE COST
First things first, you’ll need to work out the numbers. This is vital because it’s the way you’ll know if this is a sensible investment.
The sums behind flipping are relatively simple. Like any other business, your profit is what you’ll pocket after all of your expenses. For a property, expenses include the purchase price and additional costs – that’s material, as well as professional labour. You must also account for fees associated with buying and selling.
The tricky part is usually calculating the costs accurately. If you’ve got the necessary skills and experience to do any of the renovation work yourself, you should be able to come up with realistic cost estimates. If not, you’ll need to do your homework to get a clear idea of your outlay.
Then, once you have your estimate, it’s wise to consider adding 10% to cover unexpected bills. Also, it’s important to try to stick to the budget as strictly as you can.
PICK YOUR PROPERTY CAREFULLY
Make sure you choose a property with not only the right potential or a good location, but that you can renovate in good time and on budget.
It definitely helps to buy in areas you know well. Good infrastructure, transport links and local schools are also key factors to consider.
If you aren’t familiar with the area, speak to your estate agent for advice on what buyers in the area want. Take a look at the going rate for similar properties to understand what yours could be worth once complete.
When you have an idea of the type of property and the location, set up new listings alerts on property websites so you’ll be notified when the perfect property is listed, or a price has fallen.
UNDERSTAND POTENTIAL BUYERS
Think about who you want to sell to and what they want – will it be a family home with a number of bedrooms? Or is a home office a better way to show the space off? Research by Strike found that four in 10 home-movers now want a bigger garden or outdoor space, while a quarter say not having a home office has become a deal-breaker. So make your space count, as it will be a selling point in 2021.
SAVE MONEY WHEN YOU SELL
Estate agents’ fees can add up too, so it’s important to factor them in, whether they are a percentage of the sale or a flat rate. Strike, which makes money from optional third party referrals, offers a free home selling service.