Flipping Property For A Flipping Fortune
Written by The Landlord on 25 Sep 2007Flipping properties is a highly lucrative, but risky way of making a quick fortune. It’s becoming increasingly popular amongst the public because a) it’s a relatively simple concept b) it’s the “in” thing right now c) as mentioned, it can be extremely lucrative.
What is property flipping?
It’s the name given to the act of buying a property then putting it back on the market immediately for a higher price, often between exchange and completion, avoiding shelling out more than a 5% deposit. A prime example of a flip is what people do on shows like “Property Ladder”. However, I can’t help but feel they make it look a little bit too easy.
Flipping sounds easy, right?
True, it sounds easy. Unfortunately, it’s becoming extremely difficult to execute a flip. Not because the actual process of flipping is too complex for the average person, because let’s face it, a monkey could learn the process. However, finding the right property to flip is an art that needs to be mastered in itself to be flipping fantastic. Everyone is looking for that quick buck in the property industry, so the most obvious properties that have flipping potential get snapped up quickly. Undervalued properties are particularly hard to find in today’s hot market, but there are still some around. What can I say? The market is full of sharks.
Flipping points to consider:
- There is nothing wrong with flipping; it’s a perfectly legit method of making a quick fortune.
- In a strong market, flippers can make hundreds of thousands in months. The success of flipping is very much dependent on the current state of the financial market.
- The basic principle of flipping is to buy a property, and convince someone to pay more for it in the shortest time possible.
- The most advanced flippers sell property between exchange and completion. Essentially, they only ever need to cough up a five per cent deposit. If they can buy a house for £1million and sell it to somebody else for £1.2million before completion, they quadruple their £50,000 outlay. Ingenious, right? No, not really.
- Trying to make a flip on a property that will most likely appeal to a niche market could cost you. Try to flip properties that will appeal to the mass. As in, nothing too abstract and requires an acquired taste. Those types of properties usually take longer to sell as the market is much smaller. To mitigate the risk, investors have to know their markets well enough to be sure they’re investing in a property other local buyers will want.
- Most properties that hold a potential flipping quality are found at auctions. Why? Because a lot of repossessed houses get sold at auctions. Mortgage lenders don’t have the time or patience to try and profit from selling properties- they just want their money back as quickly as possible. Additionally, people want quick sales at auctions, so they’re willing to accept low offers.
- Know your local market, so you know a good deal when you see one. Keep an eye on your local estate agents activity, the Lord knows they’re not the best trained monkeys. You could find a property which has been undervalued by a sleepy agent.
- Make no mistake, flipping is considerably risky. Like all risks, the more you lay down, the more you could potentially profit…or lose.
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I initially started this website because I wanted to document my every step from property idiot to property landlord,
in hope that people would find my site and help me along the way. I literally didn't have a clue about being a landlord
when I started this website.
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