House Flipping for the Modern Housing Market
‘House flipping’ – the practice of buying dilapidated buildings at bargain prices and renovating them for high profits in short spaces of time gained a bad reputation in the property boom of the late 1990’s and early ‘naughties’. Cowboy builders were no longer the only risk in the property market; the well-meaning but inexperienced were now able to leap on the property bandwagon and make a killing by cosmetically improving houses and selling them on. Unfortunately, this meant unsuspecting buyers were left with property nightmares that fueled such shows as “Help! My House Is Falling Down.” On Channel 4 in the UK.
With the affordability of housing in the UK tumbling over the past decade, and the current economic climate meaning that the property market is more hostile than ever before, the practise of ‘house flipping’ is on the decline. This does not, however, mean there isn’t money to be made.
Only Buy the Real Bargains – Houses that are cheap are often cheap for a reason. If there is something structurally wrong with the property, or there are legalities that tie your hands for renovation and improvement, this is not your house flipping investment. Instead of scouring real estate agencies for apparent bargains, look for properties on the auction circuit. Right Move have an ‘auction’ filter that is very useful, and local papers are a great source for upcoming auctions. The unfortunate reality is that the economic downturn has resulted in far more people failing to keep up with their mortgage payments, and as such the property auction circuit is saturated with low cost properties. This doesn’t mean buying any house that is under-priced. You still need to do your homework. Look for the houses that are low in price and need cosmetic work doing; especially those with dated bathrooms and kitchens.
The Old Property Flipping Rules Still Apply – The real money is in ‘fast and dirty’ property flipping. Line up a contingent of trustworthy and experienced experts. Quick Move Conveyancing are a fantastic service for fast and secure conveyancing, wherever you are in the country, and national law firm chains such as Quality Solicitors mean that you can buy property anywhere in the country without having to find new experts.
Make sure you research the average house price in the area you are looking to buy in; know how much profit you are likely to make and work out your renovation costs accordingly. Do not personalise the house. Getting emotionally invested means spending more money than needed on a house the next owner is going to want to change in any case. Update the house to the highest specifications you can within a budget that does not mean you need to raise the price of the house above average market value to recoup your costs; in the current market people are not going to pay over the odds for a property regardless of the quality of the bathroom taps!
For the amateur or inexperienced, the modern house flipping market is all about spotting a bargain and cosmetic fixes. Leave structural change and “problem properties” to the experts.
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