First things first, you need to know what you are getting into. Will this be a one off? Or, your new business venture? If you are planning on flipping houses for profit, then it could be regarded as being in the business of property renovation. This is a costly venture and you need to ensure, especially if you have a family to look after, that all your current responsibilities won’t be eschewed.
It’s not just flipping that carries the burden of commercial enterprise, even becoming a landlord or lady, with renters poses risks. To protect yourself personally, you might need to register a company and run the project as a business. In the short term bills would be paid, financial management, strata fees and similar costs will be your responsibility. You will also need to keep the house in good shape. It is also a smart idea to contact a financial manager or check out a loan calculator to see if setting up a business renting or flipping is the project for you.
Research the Market
Get to know the suburb and surrounding areas that you are considering to purchase property in. How much are the houses being sold for? What kinds of properties are in these areas? Are there many short-term renters or more permanent owners? Is it a lively suburb, lots of nightlife, student life etc.? What do the inhabitants look for, and how could a property cater to their needs? Remember, working at the low end of the market is less risky. You’ve got more buyers who can afford the property if you’re operating in the less expensive suburbs.
Researching the areas can give you an insight into the kind of property you would most likely be purchasing. Attend a few open houses and see for yourself what kinds of properties are for sale and observe how the estate agents and owners are presenting the property to potential buyers. If you like any of their ideas, make a mental note and remember to emulate it in your own style.
Vet Real Estate Agents
Once you know what kind of property you are looking for, and where you would like to purchase - or even if you have only whittled the list down to a few areas - it’s time to engage the services of a real estate agent. Even if you have a good rapport with the estate agent, do your research on your agent. Check reviewer sites and the various previous properties they have sold and find the person who can make your house flipping dreams a reality. The right agent will help you make the right choice.
Renovate - Update and Upstyle ASAP
Once you’ve purchased the property you’ll realise your work is just beginning. Just remember you are planning to make a profit on this property, so save as much costs as you can in the renovations and get it done as soon as possible. Being quick means you minimise hold costs and you’re not exposed to unforeseen market downturns.
Do as much as you can yourself. Most small fixes or paint touch ups do not require a professional. Do not attempt any structural changes - you need to turn this around quickly. Look up local tradespeople with good reviews on airtasker, yelp etc. Like the estate agents, it is a good idea to build relationships with local skilled people so you can re-enlist their services.
The house is done, the tradesmen have finished and the paint is dry. The real estate agent is bringing around potential buyers and you’re waiting to hear the good news. Once the house has been successfully flipped, it’s on to the next project. House-flipping is a very time consuming effort and flipping properties for profit is not always going to be a goldmine, property investors typically make more money when the market is bad, when there's more stock, fewer buyers and greater competition among tradespeople. But by sticking to a few simple rules you can make a fast profit every time.
If you have the financial know-how, the budget, perseverance, design smarts and skilled tradie connections, you could very well get into the house flipping market and turn profits!
Till next time...fix and flip!