I am guessing that by now you have seen or heard about property flipping. TV shows like Under the Hammer gives you a pretty good insight into flipping properties for profit although I’d recommend you learn a little more than what you are shown in the show.
There are various steps to flipping properties and if you follow them you should be earning yourself a nice little cash pile for more and more – an exponential rise in profits and the number of properties you can flip at any one time.
Firstly you will need to find these properties and like the TV show you can use auctions. We won’t talk about auctions today simply because it’s another blog post in itself and there are many do’s and don’ts that you need to know before getting involved.
The best way to find properties that need some work are through estate agents or your own marketing which may include newspaper advertising, leaflets and word of mouth. Ensure you design the advertising to suit your market, what I mean by this is if you are looking for properties around the £65,000 to £120,000 mark you don’t want to be sending leaflets out to London anytime soon.
We like to make at least £20,000 on any deal where we need to spend money refurbishing and in addition to the buy and sell costs you will need a good 25-30% discount. Broadly speaking if the property is going to sell for £120,000 you need to work backwards from there. So take off the £20,000 and then the buy and sell costs plus the work you need to carry out and you have your buy price. Roughly £80,000. I also like to build in a little contingency for any surprises – In this case about £2,000 should do the trick.
We have a spreadsheet we designed for flipping costs and profits which are very detailed and we will never buy a property if we have not run it through this part of the system.
Try to use local builders and get references from recent customers who have used them for similar projects. Go and see the completed work so you are happy that the builder is genuine. If they sound too cheap then they probably are.
Once the refurb is complete you will need to sell. We tend to use the same agent to sell if they introduced us to the deal. This is also key as they know the property and will have already mailed their list of potential buyers making the process a little quicker.
The whole cycle takes about 6-9 months so make sure you have factored this into your costs when using a mortgage and/or JV for the money.
Finding properties, money, builders and selling for a profit sounds pretty simple but there are a load of little tips that you need to be aware of when flipping properties for profit.
To learn more about flipping properties why not join me for a day where I run a property investor beginners day teaching you about flipping, BTL, options and much more.
For more information please visit the link for free reports and to register for the day. http://thepropertyinvestorcompany.co.uk/property-investor-newbies/
Yours for property profits