House in the country

How to make money flipping houses?

Where to start?

Initially you may feel that the whole process is quite daunting, and I would have to tell you that you are not wrong. It is daunting, but there are many reasons for going into house flipping and if any one of your reasons is powerful enough you will overcome this initial fear easily.

I always feel that it’s best to start with simple maths. Don’t worry we’re not talking advanced calculus. If we drastically simplify the selling and buying process and your part within it, we can reach this short equation.

Price House is Sold for – (Price House was bought for + Cost to Do it up + Fees) = Take home Profit

Why are we looking at this? I hear you ask. It’s quite simple, if you want to make this your profession you’re going to need to make money from each sale. In order to make money and increase the amount you can earn you need to increase the price you can sell the house for or decrease the cost, fees or price you buy the property for in the first place. So let’s break each of these down

  • Increase Selling Price of Property

    I am sure this one comes as no surprise to you, if you increase the price you sell something for you can make more money. The million dollar question is how to increase the value of the property.

    Yes the more you ask the more profit you can make, although it also usually also means the more commission you will have to pay your estate agent.

  • Decrease Price Property Cost to Buy

    If you’ve already bought the property then you won’t be able to decrease this cost. If however you’re currently looking to buy you may be able to bargain and get a price lower than the asking price or at least lower than the current value of the property.

  • Decrease Cost Required to Do it Up

    This is a big one, and probably the one that you have the best control over. If you can reduce your renovation costs your profit can increase quite significantly. The best way is to get handy with some DIY, and buy any furnishings and fittings secondhand.

  • Decrease the Cost of Fees

    This is another way to increase your profit, the easiest way to decrease your fees is to use online comparison sites. With a quick Google search you will find plenty of sites that offer various different comparisons and are likely to provide cheaper quotes than your local solicitor or estate agent.

Lets Not Forget About Tax

In the UK we have to pay Capital Gains Tax. We don’t pay it on properties that are designated as our own residence – of which you can only nominate one property, so if you are thinking of making flipping into a business you need to know whether your activities will be subject to CGT or not.

If we’re talking of flipping as a means to better your own residence in order to climb up the property ladder or as a hedge against inflation for your old age then we’re talking about singular property acquisitions.
More information regarding tax and other fees in the UK visit this site.

Do As Much Of The Improvement Work You Can Yourself

Why pay somebody to do a job you can already do yourself, like tidying the garden or painting. Anyone can paint. You just need to apply a good standard to your work to obtain a decent finish. If you don’t know how to do a job you could learn by watching a YouTube video or by obtaining a book on the topic or by going to night-school to learn a skill or trade. Most good general builders and handymen learnt by learning one job first then when they became adequate at one trade or skill they learned another.

Alternatively, you may be able to reduce the costs of hiring a proper builder or tradesman by offering to be his ‘mate’ or labourer on the job. Bricklayers need somebody to mix the cement for them and pass them loads of bricks.

Keep Your Ear To The Ground

Let all your local estate agents know that you are in the market for a quick purchase. If you are a cash buyer, your finances are in place and your solicitor is hot to trot you should be able to beat others to the finishing line especially if they have the burden of engaging a solicitor, and selling their house first and if the seller wants a quick sale you are in with a good chance.

Every property has the right purchaser for the sale. It could just be you.

Watch the Market

Sell high when prices are high and property is in demand. Be prepared to sell lower if you’ve made a decent profit and property is moving slowly anyway, especially if you’ve got to sell to finance your next buy.

Remember it’s all relative. If you’ve dropped your house by 5k to buy a property that has been reduced by 20k so how much have you actually lost out on?