Profitable property or “Flipping Property” is all about the numbers. Nothing you may not already know but which numbers are most important and how do you apply them is not always known. So we decided to delve into our experience and observation and share our insights from a buyer’s perspective, the one’s you are targeted your flip property too! So let’s get started with our buyer insights on those ever crucial numbers.
- Budget – The most important number. How much do you have to invest? How much in the purchase price? How much into the renovation/modernistion/flip cost? Your budget number will guide your expenditure decisions and will also guide your potential locations for research and the condition of a property.
- Time – Time can be an expensive number in property for profit. The less time that is invested into a property for flipping or profit is optimum, but to start you will need to know how much time you have to invest -per week, total weeks or months? This number will guide the condition of a property and the trades people you may want or need to have involved based on your budget and time availability. The more work required in a property the more time involved which may erode your budget and profit in the long run.
- Distance – Your budget number and how much time you have to invest will help guide your research into a property’s location. If you are doing a property flip as a hobby or as a business venture, the time traveled between your home and your property is best to be at its minimum because, yes you got it, time is money. The more time you have at your property and the less time traveling between destinations will be to your advantage, always!
- Location Attributes – The higher the number of location attributes the more desired a location will be to a potential buyer, for example close to (walking distance or a very short drive away);
- business areas for employment,
- railway but not too close,
- bus but not too close,
- airport but not too close or under a flight path,
- local shopping centre,
- green space – parklands, playgrounds,
- education centres – daycare, schools, university,
- hobby interests – sports, creative arts, music,
- no or very low flood risk,
- an appealing outlook from living, kitchen or entertaining spaces.
- Renovation price. Once you have sourced a shortlist of properties you will need to estimate or/and obtain quotes to know what work/expense/investment the property will require. This will have a price and you should include any purchase/sale/transfer/taxes costs that may be required into your renovation price. Remember to include a contingency cost because in property and against a firm timeframe things happen, timeframes can slip out and additional costs can be incurred.
- Purchase price. Keeping in mind that the objective in property for profit is to secure a “property in a desired location, with the least amount of work required for the lowest possible price to obtain the highest possible profit”. To obtain the lowest possible price is to try and source a property in an unconventional way, to know the current market price, know a Sellers motives for sale, and know the property and well. Yes you can use a Buyers Agent to source a property for you which will help you reduce your research time and cost and line up your next property to flip so you have your property flips timed and scheduled, but there are other ways you can source property such as locally advertised personal estate sales, government property/asset auction sales, staying in touch with local Selling Agents in areas of your desire, property sales that have lagged or been ‘on then off’ the market, advertise yourself on social media and in your local area e.g. get to know local people or perhaps brand your vehicle. It’s basically a mobile ad billboard! Let people connect with you, they may have or know what you are looking for and with minimum cost to you!
- Profit – The second most important number! Before you enter negotiation on any property you need to run the numbers. Then run the numbers, then run them one last time. In property for profit the goal is maximum profit. Highly desired location + lowest possible purchase price + lowest possible renovation = your profit and enjoyment!
- Budget – Now to the last number which is your first number and the most important number as it’s your triple check point; the Budget. How much do you have to invest? How much in the purchase price? How much into the renovation/modernisation/flip? Your budget number will guide your potential locations for research, expenditure decisions and maximising your profit which is the goal of course! If your purchase price and renovation cost estimates exceed your budget, then re-work the numbers, change your decisions, mix things up. There are many ways to do this from changing your property research locations, renovation schedule of work, quality of finish to fittings and fixtures to name a few.
Our knowledge is based on our experience both individually and with clients. Each property is unique and should be considered individually but most importantly enjoy the opportunity and your focus on the end goal when flipping property!
Good luck and if you are ready to research your next property to flip we can assist you in sourcing a property primed for flipping or with our Design and Renovation services and quality trades people. Our local knowledge will be your secret weapon in property. Contact Us!