Flipping houses is an increasingly popular investment tactic in the UK that allows flippers to earn some extra money on the side and turn their side hustle into an be an incredibly profitable business.
But before you dive into the world of property flipping, you need to learn how to flip houses in the UK and minimise the risks involved.
Property flipping is the process of buying a property, ideally below its market value, rehabbing it, and then selling it for a profit. It allows you to earn a lump sum of money, often much faster than traditional property investing tactics, but it does come with some risks.
Finding good deals on properties can be tricky and you need capital to finance the purchase and any repairs. You’ll also need to be prepared for the possibility that the property may not sell as quickly as you hope, or for as much as you want.
Calculating profit when flipping a property is pretty straightforward. You need to factor in the purchase price, expenses, and taxes to get a gross sum of what you could make from selling that property.
Although it may seem simple enough on the surface, flipping properties is a risky business because the process can involve some unexpected expenses and fees to consider as well as a number of scenarios that may or may not be in your favour.
But, that doesn’t mean you can’t turn things around.
The most challenging part of the process is determining the viability of a project, which requires a certain skill set and experience.
You need to know the property’s worth in a given area, figure out what needs remodelling and fixing, and how much it would cost. You’ll also need a good understanding of the market and a keen eye to pick out properties that could sell in that location.
Most property developers aim for a minimum ROI of around 20%.
The best area to flip houses in the UK in 2020 was in Burnley in Lancashire.
Here’s a step-by-step guide on how to flip a property.
Conducting research is key to successful house flipping. It can help you assess the desirability of the property and location, the demographics of potential buyers, how to promote it, and most importantly, figure out whether it’s a worthy investment.
It’s crucial to get your finances in order well before you invest in a property. You’ll need to have enough funds to cover purchase and refurbishing costs, but you should set some money on the side for unexpected expenses.
If you’re short on cash, you might want to consider applying for a short-term bridging loan, which gives buyers quick access to funding over a short period of time.
Arguably, the most interesting plant of flipping houses in refurbishing the property that you bought. When making improvements, it’s important to consider a couple of factors, including what your target buyers would look for in a house, how much work you can do by yourself, and how much you can pay for materials and hiring help.
The best approach is to create a detailed schedule beforehand and make slight adjustments as you move forward with the project.
Once the hard work is done and you’re certain that it’s presentable and appealing to your target buyers, you can add the home to property listing sites or ask an estate agent to help you sell it.
You can use your original research to set a price range but make sure that it’s in line with current market trends.
Regardless of whether you’re flipping houses as a limited company for buy-to-let, you’ll have to pay a capital gain tax (unless your gains are below the tax-free allowance limit).
Buy-to-let companies are also required to pay corporation tax. Individuals pay an income tax on flipped property and might potentially have to pay National Insurance on a sale.
Here are some tips for property flipping that can help you avoid unnecessary costs and make a profitable sale.
Flipping a house requires a lot of planning and accurate forecasting. You need to find a property that sells for a price that’s below the market value, asses whether it’s in a location where it could sell for more, and calculate refurbishing costs.
One of the most important parts of flipping a house is figuring out your target buyers. Once you do, you’ll need to make improvements to the property that match their needs and set an attractive price.
Staging the property is one of the best ways to target certain groups of buyers. Good staging will attract the right buyers and increase the chances of selling the property faster and for a profit.
As in many industries and business sectors, marketing is an essential part of selling a product. The same applies to property selling. To give the property the best chance at selling at the right time and right price, you’ll have to put a little extra effort to promote it the right way and in proper channels.
Flipping a house is a good way to get a lump sum of money, but it’s a complex process that involves a lot of trial and error, which can be costly. The best way to avoid unexpected expenses is to do your research and learn everything you can about how to flip houses in the UK, before diving into the business.