HOW TO MAKE MONEY PROPERTY FLIPPING UK
Ellie Dalglish-Hawkins
February 20th, 2023
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Flipping houses is a popular investment strategy, it’s an appealing prospect and one that has been made popular by the tens of TV shows on the subject. The question though, in practice, is it a viable option when it comes to investing in property, or do the actual results not line up with the expectation?
Well, to answer the question you can definitely make money flipping houses in the UK, but it’s not as easy as it may seem and there’s a lot you need to take into account. It’s just as easy to make money as to lose it when flipping, so we’ve put together a guide for you to help you with your first successful flip!
The chances are, if you are here, then you know what property flipping is. That being said, there’s one really key aspect we often think that people forget about.
Flipping is used to describe purchasing a revenue-generating asset, which in this scenario is a property, and quickly reselling it for a profit.
When it comes to flipping a property, speed is the single most important element, the longer it takes the longer it costs and it will have a significant impact on your profit.
You start your journey with research, lots and lots of research. Don’t just jump into buying a distressed property, no matter how appealing it initially looks. You need to have a plan in place and be as prepared as you can before pulling the trigger.
Assessing your skill set
You need to have many talents to be an effective house flipper, and it doesn’t necessarily mean you need to get hands-on and do all of the work yourself, although of course, this will keep your costs low. Having connections or knowing what you should pay for certain projects is also a very handy skill.
Financing the project
The next steps is to figure out how you’re going to actually finance the property and renovation. If you’re not lucky enough to have the cash to fund the project outright then you will need to look into some form of loan – however, this may also require a large down payment and will, of course, come with interest that you need to factor in. A typical mortgage would be too slow to flip a property effectively.
Knowing the area
This is a big one and often overlooked. The area is important for the home value and when you’re researching the property potential, but local knowledge just generally speaking is important. The cost of tradesmen can vary heavily on the area, and you won’t believe the time that you save just by knowing about that small independent tool shop on the corner.
Finding the deal
Lastly, and of course, the most important part, is actually finding the deal itself. If the deal is fantastic from the get-go then you’re on to a winner as it will give you a lot of leeway when it comes to planning the renovation. This is something we can really help you with, if you are interested in finding the best possible investment deal, then just get in touch!
As we’ve eluded to in the previous section, you need to consider financing as it can heavily impact your bottom line and tighten your deadline. One of the most popular ways to fund a quick flip is to use a bridging loan but typically this will fix you into having to complete and sell your property within a set date, or it can start to get expensive.
We’ve got a whole post on how you can best use a bridging loan for investment purposes and whether it could work for you in your situation.
When doing your research on flipping you’ll come across “x” percentage rules, which people build into their process and figures when it comes to flipping a property. In essence, what the rule means is that when you are looking to buy a property you should pay no more than 70% of a property’s value after it has been repaired, minus the cost of the repairs themselves.
The figure given is the highest you should consider paying for the property – now with that being said, it’s not always a great hard and fast rule, because it’s just a guide and varies massively depending on the price of the property, as 70% of a property that is £100k is very different to a property that is £400k for example, so it doesn’t necessarily hold true.
Although this rule is one to consider, you’re better off trying to figure out everything you will need in terms of renovations, allocating a budget for each and knowing what you can achieve at the other end – if you spend your time planning all of this out, build in a contingency fund, then it’s a lot less of a finger in the air than any of these “rules”.
Want to get into house flipping? We can help! As the UK’s leading property sourcing company, we can help you find investment properties across England and Wales. Join us today!
It’s now time to actually find and choose a house to flip, but what are the main considerations? There’s obviously a lot that you need to take into account, but here are what we could consider being the main aspects of any potential house purchase.
An area that sells quickly
You have complete control over how quickly you can renovate the property, well within reason, but what you don’t have a whole lot of control over is how quickly the property is actually able to sell. This should factor heavily into your research, you want to choose an area that is popular with a quick-moving housing market as this can save you months and months of payments and improve your profit significantly.
Appeals to a wide demographic
The type of house also matters, this somewhat factors into the sale time, but if you can choose a property that appeals to a wide range of people then the chances are it’s going to be a lot easier to sell. A three-bedroom semi-detached house for instance will appeal to young professionals but also crosses into the family market, which may help decrease the sale time significantly.
Finding a good deal
Of course, a crucial aspect is getting a below-market value deal, setting you off on the right foot. This again goes into the research and experience aspect, you need to be able to look around a property and roughly estimate how much it’s going to cost to complete the repairs up to a standard that it will sell for its market value – whilst also building in a profit that you’re happy with, based on the time it’s going to take you.
Consider the condition
Now, this might seem obvious, you’re looking for a distressed property – but you need to take a project on which is within your capabilities. This depends on you personally and the connections that you have and can utilise, there might be tasks that are completely out of your remit and those are ones that can throw your estimated prices out significantly and are very hard to account for when doing your initial research.
Simply it’s the projected revenue vs the expenses, but there’s a lot you need to consider as part of this.
Purchase Price
We’ve mentioned this throughout the whole process but the purchase price is obviously one of the major aspects, if you get this right from the get go and are able to grab yourself an amazing deal, it’s very hard to go wrong!
Bills & Financing Costs
One of the overlooked things is based on the time the project takes and how much that is going to cost you in interest, and bills like council tax for instance. This is one of the main reasons the time it takes is so important, even a few months over can completely cut into your profit.
Repair Costs (+ Contingency)
When you’re coming to planning your repair costs one of the biggest mistakes people make is that they stick to their estimates, you need to also build in a contingency because chances are a few of the projects are going to go over budget (and hopefully a few under too!) but the point is you never really can fully plan exactly how much you’re going to spend.
Resale Value
Finally to estimate your profit you need to work out how much the house is going to sell for at the end of the process, but again, consider pricing your house at a figure that will help with a speedy sale – but again this is personal preference and how long you can feasibly wait for the property to sell, financially.
Taking absolutely everything into account, we’ve put together some top tips and tricks to ensure you are able to flip a property in a profitable manner, a checklist if you will.
- Do your homework, and extensively research every property you’re considering.
- The funding is essential – you need to secure a cost-efficient funding method.
- Assemble your dream team of contacts, people you know you can trust who will do quality work, quickly.
- Don’t go overboard – you don’t need the highest quality kitchen, just one that fits the price of the property, overdoing it will just cost you more and not result in higher profits.
- Look at the housing price trends in the area, and try and choose a property that may appreciate during the time that you’re renovating it.
On the flip side (see what we did there?), there are a few common mistakes you should try and avoid when looking at flipping properties., and most of them are the opposite of what we’ve just told you on how to make a profit, however, there are a few main ones that really stick out as the most important aspects to avoid:
- Overpaying – Stick to your guns and research, don’t get carried away and overpay, which is common with distressed properties, as they are often at auctions.
- Not doing enough research – Sometimes if you’re keen to get involved you might not look into the property in as much detail as you should, especially if you’ve done a lot of research on properties in the past that haven’t worked out.
- Lack of contracts – You won’t believe how integral it is to know tradesmen that you can trust, and we can’t stress this enough. Most people often make the mistake of just choosing the cheapest quote for the job, but that doesn’t necessarily mean you get the quality or speed that you need. Maintaining relationships with tradesmen that you know will get the job done, is vital to your success.
We get thousands of properties every year, and many of them are in need of a bit of TLC in return for high profits – Become one of our investors, and invest for success.
Start your property portfolio today!
Flipping houses is a popular investment strategy, it’s an appealing prospect and one that has been made popular by the tens of TV shows on the subject. The question though, in practice, is it a viable option when it comes to investing in property, or do the actual results not line up with the expectation?
Well, to answer the question you can definitely make money flipping houses in the UK, but it’s not as easy as it may seem and there’s a lot you need to take into account. It’s just as easy to make money as to lose it when flipping, so we’ve put together a guide for you to help you with your first successful flip!
The chances are, if you are here, then you know what property flipping is. That being said, there’s one really key aspect we often think that people forget about.
Flipping is used to describe purchasing a revenue-generating asset, which in this scenario is a property, and quickly reselling it for a profit.
When it comes to flipping a property, speed is the single most important element, the longer it takes the longer it costs and it will have a significant impact on your profit.
You start your journey with research, lots and lots of research. Don’t just jump into buying a distressed property, no matter how appealing it initially looks. You need to have a plan in place and be as prepared as you can before pulling the trigger.
Assessing your skill set
You need to have many talents to be an effective house flipper, and it doesn’t necessarily mean you need to get hands-on and do all of the work yourself, although of course, this will keep your costs low. Having connections or knowing what you should pay for certain projects is also a very handy skill.
Financing the project
The next steps is to figure out how you’re going to actually finance the property and renovation. If you’re not lucky enough to have the cash to fund the project outright then you will need to look into some form of loan – however, this may also require a large down payment and will, of course, come with interest that you need to factor in. A typical mortgage would be too slow to flip a property effectively.
Knowing the area
This is a big one and often overlooked. The area is important for the home value and when you’re researching the property potential, but local knowledge just generally speaking is important. The cost of tradesmen can vary heavily on the area, and you won’t believe the time that you save just by knowing about that small independent tool shop on the corner.
Finding the deal
Lastly, and of course, the most important part, is actually finding the deal itself. If the deal is fantastic from the get-go then you’re on to a winner as it will give you a lot of leeway when it comes to planning the renovation. This is something we can really help you with, if you are interested in finding the best possible investment deal, then just get in touch!
As we’ve eluded to in the previous section, you need to consider financing as it can heavily impact your bottom line and tighten your deadline. One of the most popular ways to fund a quick flip is to use a bridging loan but typically this will fix you into having to complete and sell your property within a set date, or it can start to get expensive.
We’ve got a whole post on how you can best use a bridging loan for investment purposes and whether it could work for you in your situation.
When doing your research on flipping you’ll come across “x” percentage rules, which people build into their process and figures when it comes to flipping a property. In essence, what the rule means is that when you are looking to buy a property you should pay no more than 70% of a property’s value after it has been repaired, minus the cost of the repairs themselves.
The figure given is the highest you should consider paying for the property – now with that being said, it’s not always a great hard and fast rule, because it’s just a guide and varies massively depending on the price of the property, as 70% of a property that is £100k is very different to a property that is £400k for example, so it doesn’t necessarily hold true.
Although this rule is one to consider, you’re better off trying to figure out everything you will need in terms of renovations, allocating a budget for each and knowing what you can achieve at the other end – if you spend your time planning all of this out, build in a contingency fund, then it’s a lot less of a finger in the air than any of these “rules”.
Want to get into house flipping? We can help! As the UK’s leading property sourcing company, we can help you find investment properties across England and Wales. Join us today!
It’s now time to actually find and choose a house to flip, but what are the main considerations? There’s obviously a lot that you need to take into account, but here are what we could consider being the main aspects of any potential house purchase.
An area that sells quickly
You have complete control over how quickly you can renovate the property, well within reason, but what you don’t have a whole lot of control over is how quickly the property is actually able to sell. This should factor heavily into your research, you want to choose an area that is popular with a quick-moving housing market as this can save you months and months of payments and improve your profit significantly.
Appeals to a wide demographic
The type of house also matters, this somewhat factors into the sale time, but if you can choose a property that appeals to a wide range of people then the chances are it’s going to be a lot easier to sell. A three-bedroom semi-detached house for instance will appeal to young professionals but also crosses into the family market, which may help decrease the sale time significantly.
Finding a good deal
Of course, a crucial aspect is getting a below-market value deal, setting you off on the right foot. This again goes into the research and experience aspect, you need to be able to look around a property and roughly estimate how much it’s going to cost to complete the repairs up to a standard that it will sell for its market value – whilst also building in a profit that you’re happy with, based on the time it’s going to take you.
Consider the condition
Now, this might seem obvious, you’re looking for a distressed property – but you need to take a project on which is within your capabilities. This depends on you personally and the connections that you have and can utilise, there might be tasks that are completely out of your remit and those are ones that can throw your estimated prices out significantly and are very hard to account for when doing your initial research.
Simply it’s the projected revenue vs the expenses, but there’s a lot you need to consider as part of this.
Purchase Price
We’ve mentioned this throughout the whole process but the purchase price is obviously one of the major aspects, if you get this right from the get go and are able to grab yourself an amazing deal, it’s very hard to go wrong!
Bills & Financing Costs
One of the overlooked things is based on the time the project takes and how much that is going to cost you in interest, and bills like council tax for instance. This is one of the main reasons the time it takes is so important, even a few months over can completely cut into your profit.
Repair Costs (+ Contingency)
When you’re coming to planning your repair costs one of the biggest mistakes people make is that they stick to their estimates, you need to also build in a contingency because chances are a few of the projects are going to go over budget (and hopefully a few under too!) but the point is you never really can fully plan exactly how much you’re going to spend.
Resale Value
Finally to estimate your profit you need to work out how much the house is going to sell for at the end of the process, but again, consider pricing your house at a figure that will help with a speedy sale – but again this is personal preference and how long you can feasibly wait for the property to sell, financially.
Taking absolutely everything into account, we’ve put together some top tips and tricks to ensure you are able to flip a property in a profitable manner, a checklist if you will.
- Do your homework, and extensively research every property you’re considering.
- The funding is essential – you need to secure a cost-efficient funding method.
- Assemble your dream team of contacts, people you know you can trust who will do quality work, quickly.
- Don’t go overboard – you don’t need the highest quality kitchen, just one that fits the price of the property, overdoing it will just cost you more and not result in higher profits.
- Look at the housing price trends in the area, and try and choose a property that may appreciate during the time that you’re renovating it.
On the flip side (see what we did there?), there are a few common mistakes you should try and avoid when looking at flipping properties., and most of them are the opposite of what we’ve just told you on how to make a profit, however, there are a few main ones that really stick out as the most important aspects to avoid:
- Overpaying – Stick to your guns and research, don’t get carried away and overpay, which is common with distressed properties, as they are often at auctions.
- Not doing enough research – Sometimes if you’re keen to get involved you might not look into the property in as much detail as you should, especially if you’ve done a lot of research on properties in the past that haven’t worked out.
- Lack of contracts – You won’t believe how integral it is to know tradesmen that you can trust, and we can’t stress this enough. Most people often make the mistake of just choosing the cheapest quote for the job, but that doesn’t necessarily mean you get the quality or speed that you need. Maintaining relationships with tradesmen that you know will get the job done, is vital to your success.
We get thousands of properties every year, and many of them are in need of a bit of TLC in return for high profits – Become one of our investors, and invest for success.
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