How to flip property to make money
If you want to make money from property the easy way, you need to know how to flip successfully. Flipping is just another way of saying buy to sell – you’re aiming to buy as cheaply as possible and sell as quickly as possible for a higher price. It’s a potentially easy way to maximise your investment and end up with a big lump of cash so you can retire early.
What’s My Return on Investment?
Working out your profit on a flip is easy – just subtract your purchase price and costs from the sale price. But sometimes you need to know whether a property will yield a good return on your investment. To calculate RoI, divide the profit you make by the cash you invested. This will also include any money that you have had to spend on the property such as the services of electricians or a Blocked Drain Croydon company, in order to make the house suitable for sale again at a profit.
As a general rule, you should be aiming for an RoI of 20% or above. That way if anything does go wrong, you’ll still walk away with a decent return.
How Do I Maximise My Profit?
Successful flipping is all about buying cheap and selling high, so to maximise your profit you either need to reduce the purchasing price, sell for the maximum price or reduce your costs. Professional fees, stamp duty and holding costs are all unavoidable, so budget accordingly.
Buy at the Right Price
When it comes to property prices, do your research. Use a site like Rightmove to check the prices in the areas you’re looking at and find comparable properties or ‘comps’ so you can make an accurate assessment of your potential profit. Remember, just because you need to sell at a certain figure, it doesn’t mean you’ll get a buyer as every property has a ceiling price. Buying property at the right price is the real key to successful flipping.
Set Your Budget
The biggest expense when flipping is your refurbishment costs, as budgets can spiral out of control. Whatever figure you set, add a 10% contingency and be realistic about what you need to do to a property. A high-end finish in a mid-price property may be a waste of money. Now all you need to do is stage and sell for the maximum profit.