Is there value in flipping a property?
What does flipping mean?
“Flipping” a property means that you either buy an existing house or invest in a new development, upgrade the house, (or renovate it), and then sell it at a higher price than the original purchase price.
The point of flipping is not to create a family home or even live in the space long term. There are two types of “flippers”. People who buy an additional property to flip and then renovate it while staying somewhere else, and people who live inside the property, while the renovation is taking place.
Both of these situations have their merit, and it’s well worth exploring the possibilities of flipping and the possible financial gains you stand to get from a good flip.
Step one: Work with a plan (You’ll actually need more than one plan…)
Find the Perfect Property.
This means that it should be worth the trouble. A great house in a bad location will never get the right price, no matter how much trouble you went through to pick the perfect bathroom fixtures. Ideally a “flipping” property should be well located in terms of schools, universities, larger metropolitan hubs and other lifestyle amenities like hospitals and shopping centres.
A good basic rule is to buy the worst house in the best possible location. This lessens the risk of over-capitalising on your investment.
It’s Not YOUR Home.
You are NOT renovating for yourself. This is important when it comes to design choices and things like internal structural changes. You might have very specific views on what makes a good bathroom, or how open your living space needs to be, but these views might not be universal. It’s best to find a middle ground. An open plan kitchen and informal eating zone, but a closed off entertainment space that doesn’t fall prey to the mess of everyday living or a closed dining room but an open TV and Lounge area…these are all important points to consider when you are thinking about major structural changes to the property. The same goes for paint colours, tiles and fixtures. Chessboard bathroom floors with matt black fixtures and a completely open shower might be in vogue at the moment, but how will it age and who will it attract?
Kitchens and Bathrooms Sell Homes
You can go for good quality, affordable flooring, light fixtures and trim in the rest of the house, but don’t skimp on your two most important rooms. Be sure to create an inviting, modern feel in these rooms that will allow the new owner to creatively put their own stamp on the home.
Leave Something to the Imagination (in the garden)
Create potential. If the property has a garden, clear it out, and plant some basics, but don’t spend thousands on an intricate planned garden. Rather allow the new owner to imagine their own style and preferences, enticing them to get planting.
Pick Your Team and Stay on Top of Them.
It is imperative to get the right team in place. Trusted builders, carpenters and plumbers are invaluable to “flippers”. If you are not going to live in the property while you renovate, be ready to spend long hours there. You need to be present and involved in this process for it to be successful. Particularly when it gets to the final stages, your daily involvement can mean the difference between staying in budget and on time, or completely breaking the bank…and timelines.
Slowly Does It.
Chances are that you won’t be making mega-bucks off your very first flip. This is an intricate process, with many moving parts and hidden costs. Take the time to figure out what you did right and where you can improve before re-committing yourself to another property.
One thing is for certain. Flipping homes is some of the most fantastically frustrating fun you can have with your (painters-overalls) on.
Local House Flipping
Watch these fantastic before and after transformations:
Flipping Johannesburg
For an expert look at the costs, benefits and pitfalls of flipping property, read on:
Ooba (Flipping houses for beginners.)
Investopedia (Flipping houses)
For an In-depth discussion on House Flipping in SA, Click here
