Property investment is more than just purchasing single buy to let residential properties, there are a host of other strategies that investors can use to profit from property.
Flipping Properties, or buying to sell, buy-refurb-sell, or option to purchase to sell, can make property investors a whole years income in just one well orchestrated property deal, or leave them so financially and emotionally burned that they will be begging their old boss for their old job back that they politely told him where to put.
Here’s the right, and realistic way to flip property in 7 easy Tips from Progressive Property:
Tip 1. – 20% Return On Value
You should be looking at a 20% return, when flipping properties, [on the value, not necessarily your cash]. Anything above 30% is possibly a bit unrealistic or ‘best case’ [best case assumptions in flips are dangerous – see below].
On a £30,000 (GBP) gross profit you should come out with £15,000 (GBP) to £20,000 (GBP) Net, depending on the quality of the refurbishment.
Tip 2. – London or Rest of UK
You’re going to be either side of £100,000 (GBP) on a 3 bed terrace outside London. Stay under 1st stamp duty threshold. Buy at £90,000 (GBP) sell at £120,000 (GBP) is do-able – good in fact.
London figures are better usually, and will sell quicker, but costs and risks are higher.
Tip 3. – Be Pessimistic
Seriously. you know we’re a ‘glass half full’ kind of community, but it is vital to be pessimistic with the figures when flipping properties, likely sale prices, costs, repayments, and especially timeframes. It will take longer and cost more if you don’t think it will.
Progressive Property have a deal analyser that analyses 3 scenarios – ‘best case,’ ‘likely case,’ and ‘worst case,’ [Rob’s business partner is infamously paranoid].
You really need to ensure you come out with a minimum 5% of value return on worst case to even be interested in flipping properties.
Tip 4. – The Rule of 3
For every 3 flips you do,
1 will be best case,
1 likely case,
1 worse or slightly worse than worst case.
Most people fail when flipping properties because they have their happy ears on and expect every single property deal to be best case.
So on a £100,000 (GBP) property, if best case is £30,000 (GBP) [it’ll end up being £20,000 (GBP)], likely case £15,000 )GBP) [end up £10,000 (GBP)] and worst case £5,000 (GBP) [end up zero], then you’ll end up with around £35,000 (GBP) on every 3 flips – or an average of just below likely case [£12,000 (GBP) each flip average].
That’s actually pretty good on 3 £100,000(GBP) flips, but most people don’t get realistic to start with – you can’t blame them as they don’t know what they don’t know – Yet another reason to get educated by experienced property professionals.
So after the first one [which is often the worst case as there is not enough knowledge or experience], they give up. Keep going, you’re best deals are yet to come as your experience will only get better.
And interestingly, your best flip will be the worst case because you’ll learn the most in the shortest possible time with the most pain experienced [which makes it real].
Tip 5. – Refurb to Sell
Don’t cut corners or ‘refurb to rent.’ Someone wants to live in and love this ‘home.’ Find out what the typical buyer wants. (First Time Buyers funded by the Bank of Mum & Dad are often the best market). Pay attention to the details. Ask the Agent for feedback
Tip 6. – Reward
Why would the Agent sell your property before anyone else’s? Why would they list it in the paper, or push vendors your way? If you chip them on fees, they won’t. Pay overboard on their fees. Give don’t negotiate. Ethically reward for ‘special treatment.’ You’re their favourite, or someone else is.
Tip 7. – Good Deals
Good Deals find the Money Whether its your cash, the banks’ or a JV partners, an option or a commercial facility, a ‘lack’ of money should never stop you. A good deal finds finance. The better the deal the lower the risk.
And remember every area is different – some areas work very well for flipping properties and others dont – and it’s important to know the difference, thats where experience and a sound investment strategy comes in.
If you find these Top Tips helpful then why not take the time to invest in yourself and get along to the Progressive Property Super Conference THIS WEEKEND – Get Your Tickets Here
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