Key takeaways:
- Understand how to fix and flip in property investment to minimize your troubles.
- Associate with professionals who can help you handle the complexities with finesse.
Are you planning to fix and flip your next property investment?
Do you want to bypass the hassles related to house flipping?
If you are unaware of the nitty-gritty aspects, it can become uneasy for you to fix and flip property.
But don’t worry, as even the pros are required to refresh their knowledge on the fundamentals of flipping houses before investing large sums of money.
In this article, let’s touch on the different elements related to fix and flip strategy, from market analysis to securing financing, from marketing to selling your property.
How to Fix and Flip in Property Investment?
While different ways can help you fix and flip in property investment, here we discuss the most efficient steps:
Understand the market’s direction
A common saying in the real estate industry is that a landlord should not be concerned about the market state but rather focus on the direction it’s heading.
In a seller’s market, house prices go up and homes sell quickly. If you’re selling a renovated property, you might get a price as high or higher than you ask. The main benefit is fast sales at good prices, but the downside is it’s hard to find cheap properties because many buyers are competing.
But in the buyer’s market, the value of a property after repairs can be lower compared to the initial expectations. Also, it can take longer to sell your flipped property after renovations are complete.
Note: In any market, a well-presented property will sell first. As long as you deliver great work, you will find buyers for your properties, regardless of the market conditions.
Look out for opportunities for fixing and flipping houses
The core to implementing a fix and flip in property investment involves purchasing run-down or outdated properties. Then you have to renovate and resell them for profits.
So you require the necessary skills to locate undervalued real estate opportunities. Apart from this, you have to carefully assess the property and surroundings and oversee contractors to ensure their flips are successful within a set time and budget.
The key to identifying fix-and-flip properties is to look out for off-market homes and homeowners who are determined to sell. The sellers can be facing financial distress due to uncontrollable situations like divorce, job loss, or bankruptcy.
You can also get in touch with professionals who can help you connect with these sellers so that you can leverage the opportunity and successfully implement a fix and flip.
Assess properties for fix and flip projects
Once you figure out a potential fix and flip property, you have to assess the property carefully before making a purchase. Don’t try to save time and make blunders that can end up draining your money.
You have to be cautious with the inspection. If you feel overwhelmed with the assessment process, you can consult a professional team that can guide you through the process.
Set up an appropriate offer price
The profit you will make while selling a property depends on the price you pay for it. You don’t want to overpay for your property as it can result in zero or negative profits.
You can go through a risk assessment or take up professional help, which can help you bypass the issues.
Negotiate the purchase price and contract terms
Once you know your offer price, you have to negotiate your price and terms with the seller. It can be natural for a few property owners, but if you don’t have the natural negotiating skills, you need some practice.
Meet the seller face to face to negotiate the best price for the fix and flip prospect. You can express your concerns about the property and highlight the amount of work it can take you to resell it.
You should also remind them why your offer is the best one.
Following all these steps can be hectic and overwhelming if you are an expert in this. That’s where you can get professional help.
Pluxa Property Can Help You with Flipping Houses
Pluxa Property is an investment consultancy based in Birmingham, offering a range of services to help investors in the UK property market.
We specialize in various investment strategies, including rent to serviced accommodation, buy to serviced accommodation, and more.
Our expertise can significantly benefit those looking to engage in the fix-and-flip strategy by providing valuable insights, sourcing potential properties, and offering guidance throughout the investment process.
Our services are tailored to both novice and experienced investors, providing a comprehensive support system that can help navigate the complexities of property flipping, from sourcing the right property to understanding market trends and maximizing investment returns.
FAQs
What is the 70% rule in house flipping?
The 70% rule is a common guideline used by real estate investors when determining the maximum price they should pay for a fix and flip property. According to this rule, an investor should not pay more than 70% of the after-repair value (ARV) of a property, minus the costs of the repairs needed. For example, if the ARV of a property is $200,000 and it requires $30,000 in repairs, an investor should not pay more than $110,000 for the property ($200,000 x 70% – $30,000).
Is it a good time to flip houses in 2024?
It depends on various market conditions, including housing demand, interest rates, and the overall economic environment. You should conduct thorough market research to understand local real estate trends. While some areas may experience a booming market, making it an ideal time to flip houses, others might not be as favourable.
Peter Juhasz is the founder of Pluxa Property, the biggest property investment company in UK and Group CEO of AIP Capital Group and a property investment expert with over a decade of experience in the UK market.
He built a successful property company using innovative cashflow strategies like Serviced Accommodation and HMOs, scaling to 200 units in four years.
Peter leads a team specializing in property and business acquisitions across various sectors. A former co-host of “Cashflow With Property,” he shares his expertise in real estate investing and business scaling.
He is committed to continuous learning and helping SME owners and investors maximize their returns, driven by his passion for empowering others to achieve their financial goals.
To learn how Pluxa Property can help you in UK property investment, contact our experts.
