The Pros and Cons of House Flipping
If you buy a new property, renovate it and sell it for a profit, you are “house flipping”. The idea of house flipping has recently been made popular by TV shows such as “The Aussie Property Flippers” and “Flip This House”.
A house will have successfully been flipped if the renovations to improve it cost less than the profit made. Property’s tendency to rise in value over time is also helpful, as house flippers can sell property months or even years after acquiring it.
Here are some of the basic things you want to consider if you’re looking to flip a house for profit:
Much like buying an investment property or a new home, house flippers should look to understand the area their potential property is in before making a purchase. Contact real estate agents, look at any nearby development and get a gauge for how popular the area currently is and how popular it’s set to become over the coming years.
It’s also important to understand your target demographic. If you’re hoping to flip a house for profit, it goes without saying that you need to know the market you’ll be trying to sell to.
Just be sure to factor in all the potentially unexpected costs of buying property into your flipping calculations. You don’t want anything unexpected to affect your bottom line.
Once you understand your market and your property area, it’s time to get renovating. Get a sense of what’s important to your market as far as colours and style go, while also making sure to consider anything that could be important within the area (for example, a study room if there’s a university nearby).
But it’s particularly important to factor in cost when house flipping, because that’s where the “skill” is. You’re not renovating for personal reasons, you’re renovating to turn a profit. Use economic solutions and inexpensive fixes, and don’t be afraid to get creative!
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying a home, you can contact us for advice about the best options for you when it comes to your mortgage. The cost of your mortgage can drastically affect your financial planning, so it pays to speak to the experts about it.