Property flipping refers to buying a property and refurbishing it to sell quickly for a higher price. The practice has become more popular since the beginning of the pandemic and its associated boom in housing prices, with estate agent Hamptons recording that 19,000 properties were “flipped” in the year 2021 alone. However, despite the deceptive appeal of “easy money”, flipping, like any investment, requires skill, planning and patience with many potential ways to end up making a loss.
Nevertheless, Ascot solicitors such as https://www.parachutelaw.co.uk and those in other locations have found an increasing number of clients looking to maximise on the potential of this simple to understand, yet difficult to master, practice. Below are some common pitfalls and how to avoid them if you are considering trying your hand at the property flipping market.
Do not underestimate the cost
First and foremost, many consider property flipping without fully realising the costs and initial financing you will need in place. Just as with any ordinary house purchase, you will need to be able to take out a mortgage or, where possible, pay for the house in cash in order to speed up the buying process. With mortgage lending influenced by potentially sudden changes in the economic landscape, such as in the recent fall of the pound after the autumn mini-budget, those interested in house flipping need to have the financial capital to withstand changes to rates and products.
Allow enough time
While the whole premise of property flipping is to make a sale relatively quickly in order to keep the costs of owning the property as low as possible, many still find the process taking longer than they anticipated. This is because, as with all home purchases, aspects outside of the buyer’s control can delay the process, such as conveyancing searches and house surveys, together with unexpected remedial work these may uncover. Additionally, if the property you are attempting to purchase involves a chain of any kind, this can delay things further.
Mitigate for this by factoring in the likely delays and timescales you can reasonably expect in a property purchase and smoothing out the process where possible. Choosing a high-quality conveyancer, opting for an in-depth building survey and building a network of tradespeople and professionals whom you trust to handle refurbishment and repair work quickly all help to keep delays to a minimum.
Consider your skillset
Many of the people who make property flipping a success are also tradespeople themselves. This is because they have the technical skill and ability to make quick and effective home improvements by themselves, in addition to having a wider network of reliable professionals they can call on to handle issues beyond their skill set. While it is possible to have all refurbishment done by others, this inevitably adds to overhead costs and the length of time for a project. Be realistic about your own capabilities and the costs involved in outsourcing these.
That being said, property flipping is an effective and potentially lucrative way to capitalise on the need for high-quality housing and the number of properties that hold potential behind their initial defects or issues. By taking into consideration seriously the factors involved, recent figures indicate that a growing number of people are making a success of this opportunity.
