The property market has been an incendiary thing in recent years, between heady spikes in property value and unprecedented shifts in mortgage rates. While the recent unpredictability of the market has made it a hard sell for profit-making, let alone for first-time buyers still struggling to make their first furtive step onto the property ladder.
For those lucky enough to have made that step, or to have money for further investment in property, there remains lucrative opportunity within the property market. Its propensity for long-term inflation-beating returns makes it the perfect vehicle for investment via ‘house-flipping’ – a process by which a property is bought at a low price, renovated, then sold on for a profit. Whether you are seeking a new side-hustle to invest your money into, or a useful way to ascend the property ladder, you might be considering house-flipping. But where should you start?
Finding Your Market
First, it is important to find your market. This is especially important if you are house-flipping as a business venture, since the region and location in which you centre your project can have serious consequences for the profitability of your development. You might use ONS statistics to find the regions in the UK with the fastest-growing property values; you can couple the impact of your renovations with the natural movement of the market to create bigger gains on sale. Of course, you’ll need to make sure there is an active market in the place you decide to buy – otherwise your finished house could stagnate on the market!
Having found the perfect property to renovate, you can now set to renovating. The key here is to create a dependable team with which you can trust the renovation, whether or not you are a long distance from your development property. A reliable supplier with suitable materials can minimise delays in renovation, and ensure better results when finished; the same, of course, goes for the contractors you hire. If appropriate, you may bring costs down by conducting some simpler renovations yourself – leaving more complex and dangerous tasks to skilled professionals.
Now that the property is fully renovated and polished, it is finally time to sell. Before you sell, you should bring an independent surveyor in to check the property and your work – and to provide their own opinion for its market value. While many engage in house-flipping to quickly advance the property ladder, many others treat it purely as a business strategy, flipping second or third properties which they do not need for residential purposes. In the latter case, a common mistake can be made: pricing the property too highly.
Since a quick sale isn’t necessary for these house flippers, they may seek the highest possible price for their investment in order to maximise profit. The outcome is inverse, though, as the highly-priced property remains ignored on the market for an extended period of time – gaining a reputation as a result. The longer it lingers, the less perceived value it retains, and even reducing its value can spark fresh incredulity. Conversely, finding a comfortable and competitive price point can inspire bidding wars between prospective buyers, inflating your overall profits.