Most people interested in real estate have heard of flipping property for a profit. This is where you purchase a property and then sell it again quickly – often within 12 months – at a higher price. Experts agree that the real estate market has to be booming for this to be successful – and that you can easily just spend your life calling house movers like Brilliance Removalists in and out making a loss rather than a profit, if you don’t know what you are doing.
Both of these judgements are true. However, that need not put off the eager entrepreneur. Some of us may not be cut out to be carpet cleaners or spend our lives working for someone else. It is possible to learn how to flip homes for a profit and just because you are eager to do so, it doesn’t mean you are going to be impulsive, right? Find out who is doing it and learn from them, or pay for good information if necessary, then carefully research all the necessary details before going ahead.
In fact, there are two good ways to flip property for a profit.
- Make money when you buy the property. In this kind of flipping you purchase the property for much less than the market price. To do this you need to find a property with few competitors for the sale. It may be that it has structural damage that puts people off, or some other problem that makes people avoid it. The price you purchase at will need to be far below what the repairs and your other costs would amount to, so that when you resell there will be money left over that is all profit.
- Do renovations that will pay for themselves. Most experts in real estate will tell you that renovations to a home will not return a 100% profit when selling. Homeowners don’t usually care about that because they are looking for lifestyle enhancement more than sale value. And they mostly intend to stay in their home for several or more years. But when you buy to flip this is not the case. The kind of renovations you do are important. Some types of renovations will lift the home into another class altogether, making it much more attractive to the buyer – even changing the demographic.
For instance –
- Adding another room will increase the square footage of the house
- Adding bedrooms and/or bathrooms
- Changing the floor plan to increase functionality
- Rebuilding the house completely
These types of renovations will put the home in another category, making it attractive to a whole new group of buyers.
Of course, if you can use both ways – buying well below market value, then doing the type of renovations that make a profit, then there is even more chance of success. It is essential to do your research and work out the finances before you start. If you buy at just $50,000 below market value, it may not be enough to cover your costs.