House-flipping isn’t one of the more well-known vocations, but it is rising in popularity thanks to the huge potential return on investment offered. This is the process of purchasing a run-down or foreclosed property at a desirable price and renovating it to sell it quickly for a profit.
For entrepreneurs who aren’t afraid of hard work, starting a house-flipping business is an exciting opportunity. Reports show that 60 per cent of properties flipped in the UK during the last two years made a £10k-£75k profit so you can see why the allure is there.
However, you can expect a lot of planning, research, and risk management that needs to be done before your business is a success. Follow this guide to help you get started on becoming a house flipper and developing your business strategy.
Write a business plan
This is the very first step to getting your business on its feet and it will help you keep your investments on track. Your business plan should detail the vision you have for it, high-level financial projections, and potential investors you would like to be involved.
House flipping is all about supply and demand so market research on the competition and demand for your business should be a priority. Consider how much money you expect to need to buy properties and flip them, then how much you expect to profit.
Understand the risk
As with any business, being fully clued up on the potential risks involved in becoming a house flipper is essential before you make any financial commitments. You need to have money to get your business up and running, whether you have your own savings or convince lenders and investors to gamble on you as a budding entrepreneur with potentially no experience or portfolio.
It’s a high-cost and high-risk investment with the unpredictable nature of the UK property market so you could either be making a lot of money or losing the majority of it. Anything from unexpected renovation problems to a dip in the property market is a risk that needs to be calculated into your business plan.
Grow your network
You need a variety of resources to help you successfully make a profit on flipping each property so networking should be a priority. Start by interacting with other house flippers to make connections with reputable craftspeople and material providers.
Networking can begin at home by discussing your business plan with friends and family who are involved in real estate investment. Word-of-mouth advice can be instrumental in accessing wholesalers, contractors, and realtors.
Up your offerings
The renovation of the property is a big factor in determining how quickly you flip it so investing a little more into your properties could increase your profits tenfold. House renovations such as internal wall insulation or central heating pumps increase the efficiency of a property and boost property value.
Other improvements include garden landscaping, kitchen and bathroom upgrades, and loft conversions. This may seem like more money at first but the potential return on your investment can be huge.