The popularity of home renovation shows and public figures like ‘Renovation Queen’, Cherie Barber has inspired many to become house flippers themselves.
Unlike those who renovate their home to improve its liveability, house flippers seek to buy undervalued properties, renovate them and then sell with a goal of turning a profit.
Particularly in a subdued market, there is the potential to achieve good price growth from house flipping, as long as you are strategic about it.
Here are 4 tips to increase your prospects for a successful house flipping journey:
1. Research – House flipping is something you shouldn’t just dive into. Take the time to thoroughly research the property market and the trades you will need when you begin the renovation process. In terms of researching the market, your goal is to buy a property that is priced under market value. It’s about finding a property that you feel has the best potential after some careful planning and renovation/refurbishment. Learn as much as you can about design, simple building techniques and decorating. The more you can do yourself, the more money you will make. However, there will be some renovation tasks that are best left to the experts, like plumbing and electrical work.
2. Location is king – Location is a driving factor in any investment property buying decision. An area that’s close to amenities and transport links is always sought after by homebuyers. The ultimate goal is to purchase a ‘renovator’s delight’ that you know you can work wonders on within your budget in a great suburb.
3. Focus on the end goal – When planning the renovations, think about the potential buyers for the property and what they will be looking for. Don’t renovate the property based on what you would like yourself. Remove the emotion and treat it as a business. It’s about finding the perfect middle ground between over-improving (which will cut into your profits) and under-improving (which will see you struggling to make a sale). Put yourself in the buyers’ shoes. What design elements and style will appeal to buyers in the demographical area you have purchased in?
4. Have a budget and stick to it – Ensure you have a set goal with how much you are willing to spend on the renovations and stick to this budget to avoid shortfalls. It’s always wise to factor in a percentage for unexpected costs. Anyone who has renovated before will tell you that unexpected costs are almost guaranteed at some point. Do the math carefully when establishing your budget. Incorporate ALL costs, including the costs to sell the property, and keep the end goal firmly in mind. After all, property flipping is only worthwhile if you walk away with a profit at the end.