In recent years, an emerging form of money-making in the housing market has become common for investors from all backgrounds. The concept of “house-flipping” is now widely known and presents an attractive proposition to many business people. Put simply, house-flipping is the process of purchasing a house, undertaking some renovation work to improve it, and then selling it back on the housing market for an increased asking price.

If you can sell the property for more than the total cost of the renovations and the initial purchase price you will be able to make a profit (while also considering any other selling and legal fees). However, house-flipping should never be seen as a guaranteed way to make quick money. Time, planning, and effort are required to ensure that the venture is profitable.

In this article, some top tips on house-flipping will be discussed. These will increase the likelihood of your house-flipping project being a financial success.

Make a realistic budget

Firstly, it is of paramount importance that you have a clear and comprehensive budget for your house-flipping venture. You need to be realistic about the amount of money you can afford to spend on renovations, their predicted timescales, and whether you will do them yourself or hire building professionals.

Remember that setting an accurate budget for this work will give you a greater understanding of the profit margin you can expect to make once the property is renovated. If your renovation work experiences delays or is not completed to building standards, this will invariably cost you more and may significantly reduce the profitability of the project.

In addition, it is also important to consider the other costs such as estate agents fees and conveyancing charges. In short, make a complete budget for every part of the work you intend to undertake and all associated fees and costs.

Sources of finance

Once you have a clear understanding of the profitability of the venture, it is important to seek sources of finance for the project. In many cases when flipping a property, people do not have the funds to buy the home outright and need to seek assistance from lenders.

An ideal form of finance when flipping property is to look at hard money lending. Typically, hard money lenders will use your property as collateral when providing a loan. The loan is generally on a short-term basis (often between 3 and 36 months) which is ideal for this form of investment.

Hard money lenders can typically provide finance in a shorter period than traditional lending institutions such as banks and may not need as much paperwork to be completed.

Use professionals for complex renovation work

Finally, you will likely be planning to do some or most of the renovation work yourself. This can help to keep your costs low and improve the profitability potential of the project. It is little surprise that many people who enter the property flipping market are knowledgeable about DIY; however, for some key tasks it is important to consider hiring professional tradespeople.

Put simply, some plumbing and electrical work is complex and needs to be completed by skilled workers. If you do such work yourself and subsequently find it is not completed to the required building standards, the work may need to be repeated, dramatically reducing the profitability of your project.

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