Ever considered flipping houses for wealth creation?

Have you ever thought of doing up an old property to on-sell and make a quick profit?

This has become popularised by reality television shows like “The Block” and American program “Flip or Flop”.

What exactly is a house flipper?

A house flipper is someone who renovates for profit. They buy a property that needs repairs, renovation, or other work, then fixes it up and sell it for a profit (hopefully!).

Property flipping can be a very profitable business, but it can also be risky. If you’re not careful, you can lose money on a flip. But if you research carefully, renovating for profit (as we prefer to call flipping!) can make a tidy profit.

If you get your planning right and understand your potential return on investment (ROI), then house flipping can be a very profitable and fun investment.

What you will need for Real Estate Flipping

If you’re using real estate flipping as an alternative investment strategy, here’s an example of a couple of things to think about.

Here's a couple of points to think about:

  • Flipping houses requires money— you’ll need enough to cover the property purchase price, capital gains tax, plus renovation costs
  • A successful house flip requires contractors, electricians, plumbers, and other professionals. You need reliable workers who can do quality work within your budget
  • Don't underestimate the time to complete a project. Make sure you have a realistic timeline for each step of the process.
  • You need to have a solid plan to stay on budget and schedule.Be flexible in dealing with challenges that crop up to complete the renovation on time and within budget.
  • Flipping houses requires discipline and sticking to your budget and timeline. There are temptations to overspend or cut corners
  • It takes time to find the right property, renovate, and find buyers willing to pay top dollar for your work. You can’t build a home in a day
  • It helps if you have some basic knowledge that you’re willing to develop so you can build for profit successfully.

Flipping Example

Once you look at the two tables below, you’ll see that in a typical house flipping project your associated costs could easily add an extra 50% to your renovation budget of $75,000 when purchasing a property for $400,000 and trying to flip it after renovation for $550,000.

The occasional flipper that makes a profit it’s likely that they have fortuitously caught the right stage of the property cycle and values have moved in their favour.

Information courtesy of: Property Update and BuildHER Collective

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