Equip yourself to ace the Flip!
Buying, fixing and selling properties can be a powerful strategy to make a LOT of money. But since it involves a lot of moving parts, it is not without risks. Is there a way to reduce your risks?
Here are a few tips and tricks for those starting their property investment adventure:
Start small. Find a property that requires cosmetic changes to be made only.
fresh coat of paint internally
paint the outside walls
paint the roof
replace kitchen counter tops
paint the kitchen cabinets
replacing cabinets quickly becomes pricey so aim for painting only. You’ll be amazed at the difference it can make!
install new tiles in bathrooms and kitchen
replace outdated light fittings
put down laminate floors
lay new carpets in bedrooms and lounges
These are basic, inexpensive items that can be done quickly. Remember that the goal is to buy/fix/flip as quickly as possible. In general, people do not want to buy a house that requires work. They want something that looks fabulous so they can move in and have their friends over for a braai that very weekend!
Perform your due diligence on the property and neighborhood. Use local websites to assist you.
lightstone.co.za works for South Africa
rightmove.com works for the United Kingdom
The goal of this research is to determine the following:
what are distressed properties selling for?
how much for an average home in the area?
what can you expect to pay for a beautifully renovated home?
how long do these different types of properties tend to sit on the market for?
You simply have immerse yourself in the numbers and know all the right people.
Have multiple exit strategies. Have a Plan A…Plan B and a Plan C. if you don’t have at least three exit strategies, walk away from the deal. This way you hedge against any unexpected issues that could come up. And they will come up! If you are flipping, make sure you price the property slightly lower than the average property because you don’t want it sitting on the market for longer than necessary.
Renovate your property to a better standard than comparable sales and list them for the same price or a little bit cheaper because time is money. The sooner you can get your money out of the deal and move it to the next one, the more deals you can do in that calendar year.
Make sure you budget for at least 10% more for your property revamp project. This will ensure you are covered for the inevitable unexpected overages and costs. We recently ripped up carpets in a home we were renovating as we were assured there were beautiful wooden floors underneath. What a saving! No need to tile. Until we ripped up the dining room carpet. What a mess! Back to the tiling project and there goes R4000… cha ching….4k…poof
The more you learn, the more you earn. Spend time growing your property investment knowledge because you are going to pay ‘school fees’ one way or the other. Either through the:
School of Hard Knocks
by investing the time and energy into reading blogs such as this one
Make the right choice!