It is never too early to get ready to flip a house, but Matt McCann, CEO of LocalAgentFinder, has said flippers need to have the patience and skill to see the house flip through.
“With house prices increasing in many parts of the country, more and more Australians are turning to properties that need a modern update and renovating them to turn a profit in the real estate market,” Mr McCann said.
“However, there are a few things to remember before investing in purchasing a property, renovating or redeveloping it and trying to sell it for a profit.”
According to Mr McCann, those things are:
1. Set the flip budget
“Housing flipping isn’t a speedy process, it’s risky and requires budgeting and planning,” Mr McCann said.
Mr McCann advised house flippers to have a thorough understanding of the local market with how much renovated properties in the area have sold for in the past. This can assist in receiving a greater return on investment and also map out a clear budget.
“To determine how much the owner – and flipper – can afford to risk, the budget needs to be divided into three key areas: the cost of purchase, the cost of the renovations, and the cost of selling,” he said.
2. Find the right skill set
While renovation shows, DIY sites and online tutorials can instil the notion that people can do the renovations themselves, Mr McCann suggested to leave the hard work to the professionals.
“Unless the owner has a background in building or construction, a clear idea of council regulations, and the knowledge and skills to carry out minor renovations themselves, professionals need to undertake renovations,” he said.
In order to find professionals, Mr McCann recommended reading online reviews or talking to local real estate agents.
3. Location, location, location
Despite being commonplace knowledge when it comes to property, Mr McCann said the location of the house is a core factor that should not ignored, such as its proximity to schools, shops, public transport, parks and potentially beaches in order to help capital growth.
Other aspects of location to consider include how close the house is to high employment growth areas as well as being situated close to the flipper’s residence to quickly attend emergencies.
4. What to look for in a property
Mr McCann also suggested that flippers need to know how easy or difficult it is to change aspects of a house.
“Old carpet and 1970s wallpaper are easy to change but the structure and frame is a lot harder,” he said.
Flippers should avoid houses with cracks in concrete or brick walls, unstable foundations, cheap plastering and second-rate plumbing, electrical wiring or carpentry. Experts can also help flippers identify asbestos and termites.
5. Always keep the ideal buyer in mind
It is also important to not build what is your dream home, but the dream home for an ideal buyer. Mr McCann recommended talking with local agents or reading interior design magazines.
“If the buyers are young families, flippers should consider making the yard more child friendly or converting a study into an extra bedroom to help fetch a higher price,” Mr McCann said.
6. Accomplishing cost-effective renovations
For beginner flippers, Mr McCann said they should try starting with small improvements than launching themselves into a complete renovation. The priority, according to Mr McCann, should be the property’s curb appeal, than the kitchen and bathroom, followed by painting the interior and updating lighting fittings.
7. Sustainability sells
While it may take additional effort, Mr McCann said buyers are becoming more attracted to sustainable features, which can increase the value of a home by tens of thousands of dollars and have the added ethical component of helping the planet.
“Larger investments such as solar power, double glazed windows, or skylights can make a property more livable as well as increase the asking price come sale time,” Mr McCann said.
“Smaller changes such as installing LED lighting and switching to five-star energy efficient appliances, such as a dishwasher and stove, can also contribute to achieving a good price.”
8. Forget extensions, it’s all about the granny flat
Mr McCann also said that the granny flat should not be forgotten, as it is currently making a comeback and it is no longer just for grandparents.
“The granny flat boom in the last couple of years is a response to skyrocketing real estate prices and housing affordability issues,” he said.
“A flat out the back could mean more room for a larger family such as a teenage retreat or guest accommodation, but it can also be a great way to provide additional income as a rental property for the future homeowner.”
Mr McCann recommended for flippers to check their state government regulations before proceeding with planning or building a granny flat.
9. Determine the right time to sell
In order to sell a property, Mr McCann said the best time to list a property is when there is a low number of that type of property on the market.
Just like when determining the flip budget at the start, flippers should still be keeping a close eye on the local market and determining why the quicker listings are selling quickly.
Mr McCann said the right agent is a necessity, and can have the necessary local data to give a flip an added boost.
“Local agents have good buyer databases and their own data on property prices in the area, and can help advise owners on the best time to sell, as well as develop the right sales strategy to help fetch the best price,” he said.