It’s hard to find a more ambitious property investor than a flipper.
These are the folks who buy rundown properties, fix them up and then sell at a profit in just a few months.
If you like the sound of generating wealth from flipping properties, be aware you’ll need to be super-smart at spotting real estate trends, valuing property and estimating building costs.
The best flippers know a bargain when they see it but will never purchase without a clear vision of who the next buyer will be.
They’re tough negotiators and, once they have the keys, they’ll only repair a property to a level that will find a market of potential buyers and return a profit.
To be a flipper, you also need to have access to cash. You’ll not only have to find funds for a deposit on a loan to buy a property but also cover the repair costs.
As an experienced real estate agent in the neighborhood, I’ve worked with many flippers who have made handsome profits from their projects. Some will buy dilapidated properties, but there’s a more conservative version of the flipper, too.
These folks buy properties that are undervalued but not rundown. They renovate rather than repair and organise their finances to ease time pressures.
However, all flippers play a high stakes game. So, before you start working out how you’ll make your millions by flipping properties, consider the downside.
Flippers are often highly leveraged, and a failure to sell can cause them a lot of financial stress. Dips in the economy and a sudden oversupply of properties in the neighborhood can drive down the anticipated asking price.
If you’re considering this style of property investment, I’d be delighted to discuss with you the opportunities that currently exist in our area and the buying trends and prices we’ve seen in the last few months.
In the meantime, I’ve put together a quick list of issues you might want to consider before becoming a flipper.
- Quick profit – If you get flipping right, you will be paid handsomely for your investment. A big plus is that your capital will only be tied up for a short period, and you can move on to the next property.
- Do your research – You must understand the neighborhood and have your finger on the pulse of buying trends and prices. You can’t play this game blindfolded.
- See the big picture – Economic sentiment and the mood of the real estate market can turn in a matter of a week or two. So, you need to be confident the prevailing market conditions will continue or improve.
- Who’s your buyer – A flipper won’t fix up a home and hope for the best. They’ll have a real sense of which market segment will produce potential buyers. Any improvement that’s made will be designed to appeal to these folks.
- Know your costs – You must be able to estimate quickly the likely investment required to get a property back into shape for a sale. This will determine the price you’re prepared to pay for the property and your potential profit.
- Focus on value – You and your agent will have a steely determination to buy at a specific price. If the seller doesn’t play ball, you walk away.
- Find your buyer – With the work done, the marketing campaign should be short and focused. Knowing your target buyer makes this possible.