Property Flipping: Types, Strategies And Expert Tips

A 2022 report by Finbri showed that between 2020 and 2022, almost 62% of the houses that were flipped in the UK generated a profit of £10k-£75k. This is great, considering you can do it within a year. 

However, we have worked with some seasoned inventors who might not take that long either and move to their next flipping project every four months.

This speed comes hand in hand with a solid understanding of property flipping and how to execute it properly. 

In this guide, I will discuss just that and share tips on how you can get into property flipping and make a sustainable income source out of it.

What is property flipping? 

Property flipping is the process of purchasing real estate, renovating or improving it, and quickly reselling it for a profit. This can be done with residential or commercial properties, but it is most common with residential properties.

For example, let’s say you find a fixer-upper house in a good neighbourhood for a low price. You purchase the house and then invest in renovations to make it more appealing to potential buyers. 

Once the renovations are complete, you list the house for sale at a higher price than you paid for it. If you find a buyer who is willing to pay your asking price, you will have made a profit on the property.

Is Flipping Properties Still a Profitable Strategy in 2024?

Flipping properties remains a viable investment strategy in 2024, especially as the international real estate rental market is projected to reach $637.80 trillion. Interest in property flipping surged, with a 29% increase in related searches in 2023. Profitability hinges on market conditions; flipping thrives in hot markets with high buyer demand and limited inventory.

To estimate potential profits, use the formula:

Flipping Profit = Selling Price − (Buying Price + Buying Costs + Repair Costs + Selling Costs)

Successful flippers should purchase properties below market value, accurately calculate all costs, and stay informed about local price trends.

Despite challenges like rising costs and fluctuating interest rates, strategic planning can lead to significant returns, with average profits of around $66,500 reported by Attom Data Solutions.

What are the types of property flipping?

While there are several variations of property flipping, here are some of the most used ones. 

1. Fix and Flip

This is the most common type of property flipping. It involves purchasing a property in need of repairs, renovating it, and then reselling it for a profit.

2. Multiple Investor Flipping

This type of flipping involves partnering with multiple investors to purchase a property. The investors pool their resources to purchase the property and then share in the profits when it is sold.

3. Swift Flip (Reno Flip)

A swift flip involves purchasing a property and making quick renovations and repairs before reselling it. The aim is to increase the curb appeal of the property so it justifies the new price. This type of flipping is often used for properties in high-demand areas.

4. Cosmetic Flip

A cosmetic flip involves making minor but essential cosmetic changes to a property, such as painting, flooring, or landscaping, before reselling it.

5. Wholesale Flipping

Wholesale flipping involves purchasing a property under market value and then quickly reselling it to another investor at a higher price. This type of flipping is often used for properties that need significant repairs.

What are the benefits of property flipping?

Here are some major benefits of property flipping technique:

1. Quick Profit Potential

Property flipping can offer the potential for a quick profit. By identifying undervalued properties, making necessary improvements, and selling at a higher price, you can generate significant returns in a relatively short period.

2. Control Over the Process

When you flip a property, you have control over the entire process. From selecting the property to overseeing renovations and marketing it for sale, you can make decisions that align with your investment goals and risk tolerance.

3. Investment Diversification

Property flipping can be a valuable addition to your investment portfolio. It offers diversification beyond traditional stocks and bonds, potentially reducing overall risk and increasing returns.

4. Potential for High Returns

While there are risks involved, property flipping can offer the potential for high returns. By identifying undervalued properties in growing markets and making strategic improvements, you can capitalise on market trends and achieve substantial profits.

What are the risks involved in property flipping?

While property investment rarely disappoints people, considering the quick nature of this technique, you do need to be mindful about some potential risks. 

1. Market fluctuations

The real estate market is subject to fluctuations, and property values can rise or fall unexpectedly. If you purchase a property at a high point in the market and are unable to sell it before prices decline, you may incur losses.

2. Renovation costs overruns

Renovation projects can often involve unforeseen costs, such as hidden structural issues or unexpected material price increases. These overruns can significantly impact your profitability and potentially erode your investment.

3. Difficulty Finding Buyers

Finding a buyer for your renovated property can be challenging, especially in a slow or competitive market. If you are unable to find a buyer at your desired price, you may need to lower your asking price or hold onto the property for longer than anticipated.

These are mostly faced by beginners and can easily be solved with the help of experts. 

How to get started with property flipping?

Now that you are aware of the different property flipping techniques, here’s a general guide to how you can execute them. 

Step 1. Research The Real Estate Market

Start by conducting thorough research on the local real estate market. Identify areas with potential for growth, analyse property trends, and understand local regulations and zoning laws.

You can use websites like Zoopla or Rightmove to find areas with the highest demand. 

Step 2. Set A Budget And Create A Business Plan

Based on your research, set a budget that outlines your available funds for down payments, closing costs, renovation expenses, and holding costs. Remember to factor in potential unexpected costs.

Once you’ve determined your budget, create a detailed property business plan. This plan should include:

• Investment goals: Define your short-term and long-term financial objectives.
• Target market: Identify the type of properties you want to flip (e.g., single-family homes, condos, multi-family units).
• Renovation strategy: Outline your approach to renovations, including the scope of work and estimated costs.
• Exit strategy: Determine how you plan to sell the property (e.g., quickly for a profit or hold for long-term appreciation).
• Risk management: Assess potential risks and develop property investment strategies to mitigate them.

Step 3. Build A Network Of Contractors

If you want to build a sustainable business out of property flipping you need to have a constant flow of projects, and that comes with a good network. 

When building your network, consider factors like reputation, experience, licensing, and insurance. It’s also helpful to get recommendations from other investors or industry professionals. Start by building relationships with local professionals such as:

• General contractors: These professionals can oversee the entire renovation process.
• Specialised contractors: For specific tasks like plumbing, electrical work, and landscaping.
• Real estate agents: Agents can help you find suitable properties and assist with the sale.
• Home inspectors: Inspectors can identify potential issues before purchase and during renovations.

Step 4. Find A Property To Flip

Apart from networking you can also implement a couple of more strategies to find properties. For example, you can use real estate websites to search for properties that fit your criteria.

You can also visit foreclosure auctions to find properties at a good discount. You can simply search online for property auctions in the UK and can find plenty of auction houses and their information. 

Last but not least, you can go weekend drive-bys in your chosen neighbourhoods to spot suitable properties. 

In any of the above-mentioned cases, to find the right property, consider factors like

• Location
• Property’s condition
• Potential for you to add value to the property
• ROI (returns on investment)

Learn about the best regions for buy-to-let investments in the UK for 2024 and how these locations can enhance your rental income.

Step 5. Secure Financing

Once you’ve found a suitable property, it’s time to secure financing. There are several options to consider. You can use cash if you have the funds available. It saves the interest cost. However, if you don’t have enough money in hand you can opt for loans. 

There are conventional loans like mortgages that offer competitive interest rates, and then there are hard-money loans which are short-term loans offering quick funding, but they come with higher interest rates.  

Step 6. Purchase The Property

After sorting out the financing, you can begin with the purchase process which includes a couple of stages. 

First would be your negotiation stage, where you discuss the purchase price, closing costs, and other terms with the seller. Once you both come up with good terms and agree upon them, you can conduct a thorough inspection of the property physically as well as its documents before finalising the deal. 

Be sure to allocate funds for closing costs such as title insurance, transfer taxes, and attorney fees.

Step 7. Renovate The Property

Renovation is the core part of property flipping as it decides how much you will get out of that property. Hence, you must carefully plan the renovations in a way that doesn’t drain much funds, yet add value to the property. 

Here are some renovation types that you can consider. 

1. Cosmetic upgrades: Enhance the property’s appeal with fresh paint, flooring, and landscaping.
2. Structural repairs: Address any underlying issues such as foundation problems or plumbing leaks.
3. Energy efficiency: Improve the property’s energy efficiency with upgrades like new windows, insulation, and appliances.
4. Accessibility for special needs: Consider making the property accessible to people with disabilities.  

Step 8. Sell The Property

After being done with the renovations you can prepare to sell the property. Here are some tips for maximising your return:

• Pricing strategy: Keep a competitive selling price based on market data and the property’s condition.
• Staging: Make the property visually appealing to potential buyers. Put up high-quality images of the property across the platforms. 
• Marketing: Utilise effective marketing channels to reach a wide range of buyers. If you are just starting out and need help with finding the right audience and network of people, you can get help of property listing websites like Zoopla and Rightmove. 
• Negotiations: Be prepared to negotiate with potential buyers to reach an acceptable price.

Download the property flipping checklist for investors

This property flipping checklist is your essential guide to navigating the complex process of real estate investment. 

From submitting an offer to closing the sale, this property flipping checklist outlines every key step in detail. It covers key stages including property inspection, contractor bidding, rehab management, and listing the property. 

👉 Download this property flipping checklist (PDF guide)

What are the entry Strategies for Property Flippers? 

What are the exit Strategies for Property Flippers?

Once your property is renovated you have a couple of options for your exit strategy.  Based on the market condition and your financial goals, you can choose between these. 

1. Quick selling

In this strategy, you aim to sell the property as soon as possible to minimise holding costs and maximise profit. For this, you would need to set a competitive price and attract buyers quickly.

2. Leasing/long-term renting 

If you want to wait for a certain turn in the market but still want the property to make a profit while waiting, you can put it on lease. Lease the property to a tenant while retaining ownership. 

Give the tenant the right to purchase the property at a predetermined price within a specified period. If the property’s value increases, you can sell the option or exercise it yourself.

What are the legal considerations and Regulations in property flipping in the UK? 

Here are some legal considerations you should be aware of before entering property flipping in the UK. 

Capital Gain Tax (CGT)

You will likely be liable for Capital Gains Tax (CGT) on any profit you make from selling the property. The profits are taxable if you renovate and sell the property within 36 months of buying it. Thus, if you are planning for a quick-selling strategy, be mindful of the CGT. The CTG can range anywhere between 18% to 28% based on their tax bracket. 

Property ownership and title

Before starting any renovation work, ensure that you have a clear and legal title to the property. This will save you from a lot of legal disputes. 

Stamp Duty Land Tax (SDLT)

You will need to pay Stamp Duty Land Tax (SDLT) on the purchase of the property. So make sure you add that while calculating your ROI. The SDLT is zero up to £250,000. But after that, it can range anywhere between 5% to 12% based on the property or lease premium or transfer value. 

Image source: Gov.Uk

⭐ You can use this SDLT calculator by the UK government to calculate how much stamp duty you would pay on purchasing the property you planned. 

Planning permission:

You may need to obtain planning permission from your local council before carrying out any renovations. This is an official approval required for certain types of buffing work or development like new buildings, conversions, large extensions and listed buildings. 

This planning permission or planning consent is granted or denied by the local planning authorities (LPAs) and is conducted to ensure that the developments you are doing are beneficial for the local area and its residents. 

According to section 55 of the Town and Country Planning Act 1990, the developments that require consent from the LPAs include:

• Building operations,( like structural alterations, constructions, rebuilding, most demolitions)
• Changing material used in buildings and land,
• Engineering operations like groundwork
• Mining operations
• Operations undertaken by a person carrying on a business as a builder
• Subdivisioning a dwellinghouse into 2 or more dwellinghouses.  

Some alterations that do not require planning consent include-

• Reclassing
• Updating windows and doors
• Internal changes
• Installing solar panel
• Changes in the soft landscaping in the garden and driveway. 

Consumer protection regulations:

The Consumer Protection from Unfair Trading Regulations 2008 offer some protection to buyers from misleading or false information. This means you must be truthful in your advertising and descriptions of the property.

What’s the difference between property flipping and buy-and-hold investing?

While both property flipping and buy-and-hold investing involve real estate, they have distinct strategies and goals. Here are the key differences between the two.

1. Investment duration

Property flipping is a short-term investment strategy aimed at quickly buying, renovating, and selling properties for a profit. On the other hand in the buy-and-hold strategy, you invest for the long term. The later investment investment strategy is focused on holding properties for rental income or appreciation over time.

2. Renovation and maintenance

In the case of property flipping, the whole idea is to buy undervalued properties that are not in very good condition and renovate them to increase their value. Thus, you might often need to spend extensively to upgrade the property to attract buyers. 

On the other hand, for buy-and-hold properties, you can do away with small repairs and routine maintenance to keep the property suitable for rental income.  

3. Income potential

The primary source of income for property flipping strategy is through selling the property and it is often a one-time income opportunity. Whereas for buy-and-hold properties you earn through both rent and potential capital appreciation. 

4. Risks

Property flipping has a higher risk but potentially higher returns due to the potential for quick profits. You save on long-term maintenance and other ongoing expenses. The buy-and-hold strategy is lower in risk but gives lower returns due to the longer investment horizon.

5. Tax implications

Capital gains tax may be applicable on the profit from the sale of the property for property flipping. Whereas for buy-and-hold you get potential tax deductions related to rental income, mortgage interest, and property taxes.

Further property investment resources:

• Steps to becoming a property deal sourcer in UK
• Property deal packaging and deal sourcing
• How to start a rent-to-rent business in the UK
• Everything about investment property loans
• 11 Best Real Estate and Property Investment Books [2024]

How Pluxa Property can help you in property flipping

Pluxa Property, a leading UK property investment company, offers comprehensive services to support investors in property flipping. 

We specialise in converting buy-to-let properties into high-yielding serviced accommodations, handling everything from tenant management to interior design. 

For those looking to invest from scratch, our team assists in finding suitable properties, negotiating prices, and managing them for maximum returns. We also offer BRRR (Buy, Rehab, Rent, Refinance) investment opportunities, helping investors find discounted properties with potential. 

With over a decade of experience, Pluxa Property provides expertise in various investment strategies, including overseas investments and newly built apartments, catering to diverse investor needs across the UK.

Contact our experts and learn how we can help you flip properties and get high ROI.

Property flipping FAQs

Is Flipping Houses Right for You?

Flipping houses can be a great property investment option especially if you are looking for something that gives results quickly. However, you must take into consideration facts like its requirement for a significant investment of time, money, and effort. 

Before diving in, carefully assess your financial situation, risk tolerance, and willingness to handle the challenges involved. Consider factors such as your budget, experience level, and access to a reliable network of professionals.

Is flipping property profitable in the UK?

Yes, house flipping is a popular option in real estate to make money. You just need to be careful about market conditions, location, and your ability to execute the process efficiently. 

Is now the right time to branch out into property flipping? 

If you are planning to get into property flipping in the UK, this could be the right time as the Bank of England has recently cut the interest rates to 5% on August 1, 2024. 

What are the best UK cities for property flipping?

Some of the best UK cities for property flipping include Manchester, London, Birmingham, Edinburgh, and Liverpool. It is because these cities have the most vibrant and diverse neighbourhoods with constant demand for properties. 

What is the average house flip profit in the UK? 

According to Finbri’s 2022 report on Property Flipping, between 2020 to 2022, property flipping strategy helped investors make the profit of £10k-£75k per project.