House flipping tips for newbies

Not many people have heard of the term “house flipping” – even though it can be a lucrative way to enter the investment property market or climb the investment property ladder. When you flip a property, you search for a property that needs work, renovate it to increase its value and then sell it to make a profit. House flipping may be a clever way to make money, but you must have a solid understanding of the property market. You must be able to identify properties that will give you a good return on investment.

Even though house flipping has become more popular in South Africa, it still presents various risks and challenges. Some of these risks include affordability, unpredictable market conditions and the very real challenge of unexpected expenses. That’s why it is so important for you to have an understanding of the property market, but to also have working knowledge of renovation costs. Added to this, it is essential to have a reliable network of estate agents, financial planners and contractors to guide you through the process.

Here are some tips to help you get flipping:

Tip #1: Don’t underestimate the risks

The most common risks you face include not being able to sell the property for a profit once you have completed all the renovations. Or that you end up spending more than you expected on the repairs and renovations. This will leave you at a loss and could set you back financially. That’s why it is so important to set a realistic and all-inclusive budget.

Tip #2: Prepare for unplanned delays

Sometimes it can take a longer than expected time to find the right property to flip, then to renovate it and lastly to sell. Prepare your finances and budget to cover your expenses over the long term, as well as the short term. This will protect you from selling the property for less than it is worth, just to make a quick sale.

Tip #3: Get to know your local market

To do this you need to answer these types of questions:

To answer these questions, you need to do your research. You’ll also need to brush up on the legal and regulatory requirements in South Africa. Besides attending regular workshops and seminars, you can connect with professionals in the industry to gain more insights into your chosen local market.

Tip #4: Understand your financing options

Financing is a major aspect of flipping a house. Work on your budget so that you can use that information to understand the financing options available to you. Whether you apply for a bond, have access to cash savings or access your flexi bond, you need to assess the most cost-effective way to front the money for the property and the renovations.

Tip #5: Establish a team to work with

You’ll need a reliable team of contractors, estate agents, attorneys and accountants to guide you along the way. It may take time to find and build strong business relationships. However, once you’ve found professionals you can trust, you’ll have peace of mind knowing that you are making the right decisions.

In conclusion, it’s also important to remember to keep the buyer of your house in mind when renovating. This means avoiding making decisions based on your own tastes and designs. Everything that you do from the bathroom to the lighting fixtures must have the homebuyer in mind. That’s why you should know what type of buyer you have in mind before you get started. Begin with the end (user) in mind!