If you’ve ever watched “The Block,” or any renovating show, you’ll understand how house flipping works. You’ll know there is something intensely satisfying about transforming an old, run-down home into a modern, renovated space.
However, if you’ve done your research, you’ll also know that house flipping isn’t always as easy as it looks! This house flipping guide will explain the fundamentals of house flipping in Australia. Read on to find out how you can get started today.
What is house flipping?
House flipping is an investment approach which, put simply, involves buying property, renovating it and selling it at a profit. Ideally, unless you’re a more experienced house flipper, you want to find a property that has the potential to increase in value with some simple cosmetic updates. Only experienced renovators should attempt a full-scale renovation, as it could end up taking months or even years!
The aim when house flipping is to renovate a property and sell it again as quickly as possible. This will ensure you can get the maximum amount of profit without losing money that potentially could have been gained in rental income or by investing your money elsewhere.
Your guide to house flipping
House flipping isn’t always as easy as renovation shows make it look. In fact, you’re not always guaranteed to make a profit. That said, if you buy cleverly in the right areas, stay within your budget for renovations, and time your purchase right, you can stand to make a significant return on your investment.
Step 1: Buy smart
First things first: buy well. Making the right property investment choice is possibly the most critical step in the house flipping process.
Generally, you’re looking for an undervalued property on the market that will appeal to a variety of buyers, in an area with good local transport networks and amenities. Importantly, the price needs to be right, even if you need to wait several weeks or months to find the right property.
Aside from area, there are other several key features to look for when house flipping. For instance, you need to find a home with strong foundations. You should have a thorough understanding of the condition of the property. This will help you understand exactly what renovations need to be completed and how much they will cost.
Above all, you don’t want to be burdened with any hidden surprises that could blow out your renovation costs.
Step 2: Consider your finances carefully
You shouldn’t attempt house flipping unless you have significant capital and enough time to devote to renovations. Ideally, you should have cash ready when purchasing an investment property.
To make a return on your investment, you need to stay strictly within your budget for renovations. Large renovations shouldn’t be attempted unless you are an experienced renovator, not just a casual fan of “The Block”!
Renovations of the kitchen or bathroom can cause costs to blow out quickly. Of course, you don’t need to do everything yourself. In fact, it’s better to hire experts where possible, but you need to consider all costs carefully. If you can save some money doing DIY renovations quickly, this could help you turn a profit.
Don’t underestimate the power of small tweaks. A fresh coat of paint, painting tiles in the bathroom or adding new tap wear can make a surprising difference.
Step 3: Learn everything there is to know
Finally, the more knowledgeable you are, the better. To make a profit, you need to understand the local market well.
Even experts with a deep understanding of the local area can’t always predict which way the property market will turn, so you need to be well-informed if you want to gain a competitive advantage.
Get in-depth information from a local real estate expert who understands the area well. Your local agent can provide valuable market knowledge, tips and practical guidance, so it pays to build a solid relationship with them early on.
Boutique Property Agents have deep knowledge of the local Sydney property market. They can provide invaluable tips and honest insights to help you make the right decision when it comes to flipping a home.