In the UK, there are many opportunities to make a profit by buying and selling properties. Flipping properties has been a tried and tested strategy that many people have made some serious money from over the years.
But knowing how to flip houses in the UK is more than just buying a rundown property, giving it a lick of paint and selling it at a huge profit.
In this article, we will explain everything you need to know about flipping houses in the UK, from choosing the right location to identifying buyers’ needs.
Understand What Flipping Houses Means
Flipping houses is when you buy a property, usually at a low price, renovate it and then sell it at a higher price. The key to making money from flipping houses is to buy the property at a low enough price so that you can afford to carry out the necessary renovations and still make a healthy profit.
Some people believe that flipping houses is a guaranteed money maker but it is not that simple. Like any business, there is always an element of risk involved. The most important thing to remember when flipping houses is that you are in the business of buying and selling properties, not homes. It is important to keep emotion out of the equation as this can cloud your judgement and lead to making bad decisions.
Choose the Right Financing Option
One of the most important decisions you will make when flipping houses is how you finance your purchase. There are a few different options available to you but the most common are mortgages and bridging loans.
Mortgages are usually the best option for those who are looking to buy and flip properties on a long-term basis because they usually have lower interest rates than other types of loans. It is very difficult now to get a short-term mortgage in the UK which has changed the way people finance their property flipping businesses.
Bridging loans are another option that can be used to finance the purchase of a property. These are usually short-term loans that are used to ‘bridge’ the gap between the purchase of a property and the sale of another. Bridging loans usually have higher interest rates than mortgages but they can be a good option if you are looking to buy and flip properties on a short-term basis.
Identify the Best Area
When flipping houses, one of the most important things to consider is location. You need to choose an area that is in high demand but still has properties that are undervalued.
One way to find out which areas are in high demand is to look at the prices of similar properties in different areas. This will give you an idea of which areas are currently popular with buyers and where prices are rising.
Another way to find out about upcoming trends is to talk to local estate agents. They will usually have a good idea of which areas are becoming popular and where prices are rising.
There are various factors that help make a location more desirable including:
- Good transport links
- Close to amenities
- Low crime rates
- Good schools in the area
Find the Right Property
Once you have chosen an area, it is time to start looking for properties. There are a few things you need to consider when choosing a property to flip.
The first thing to consider is the condition of the property. You need to find a property that needs some work but nothing too major because extensive renovations will end up costing you more money than you are able to make.
Another thing to consider is the size of the property. If you are relatively new to flipping houses, it is best to start with a smaller property as they are easier and less expensive to renovate.
Once you have found a few properties that you are interested in, it is time to get some professional help. It is always a good idea to get a surveyor’s report before making an offer on a property. This will give you an idea of any structural problems that need to be fixed and will help you negotiate a lower price. Speaking of which…
Get the Right Price
In order to make a profit on the property, it is crucial that you don’t overpay in the first place. This is a common mistake made by inexperienced flippers who get caught up in the excitement of a good deal and end up paying too much.
The best way to avoid this is to have a maximum price in mind before you start looking at properties. This will help you stick to your budget and not overspend. Do your research on how much you will be able to sell the house for so that you know how much you can afford to spend.
Remember, you are not buying a home for your family to live in, you are trying to make money. If the price isn’t right then walk away. There will always be other properties.
Tips for Buying Properties for Below Market Value
Successful flipping is all about getting the best possible purchase price. Here are two ways to achieve this:
1. Utilise Property Auctions
Auctions are a great way to buy properties at a lower price and then sell them for a profit.
When buying a property at auction, it is important to:
- Get a mortgage agreed in principle – This will give you the finance you need to buy the property.
- Have a realistic budget – Make sure you know how much you can afford to spend.
- Bid early – The earlier you bid, the more likely you are to get the property.
- Be prepared to walk away – If the price starts to get too high, don’t be afraid to walk away. There will always be another property.
To find out about upcoming auctions, you can search online or contact your local auction house.
2. Buy Off-Market
Another great way to buy properties at a lower price is to buy off-market. This means buying a property that is not being advertised for sale.
There are several ways to find off-market properties, such as:
- Searching for probate properties – When someone dies, their property is often sold to cover the cost of their estate.
- Contacting absentee owners – These are people who own property but don’t live in it. They may be willing to sell for a lower price.
- Asking local estate agents – Sometimes, estate agents will have properties that are not yet on the market.
Identify Buyers’ Needs
When you are flipping a property, it is important to think about who your target buyer is going to be. This will help you make decisions about what changes to make to the property and how to market it.
If you are trying to appeal to families, then you will need to make sure the property is in a good school district and that it has enough bedrooms. If you are trying to appeal to young professionals, then you will need to make sure the property is in a good location with good transport links.
Once you have identified your target buyer, you can start making decisions about what changes to make to the property.
Renovate on a Budget
Once you have bought the property, it is time to start renovating. When flipping houses, you need to be careful not to overspend on renovations as this will eat into your profits. It is important to stick to a budget and only do the renovations that are necessary.
These usually include:
- Fixing any structural problems
- Making cosmetic changes such as painting, redecorating, and installing new fixtures and fittings.
- Replacing old carpets and flooring
Curb appeal is massive when it comes to selling properties and you can really make a property stand out from the crowd with just a little DIY landscaping. Cut the grass, trim the hedges, and plant some flowers. These small changes can make a big difference when it comes to enticing buyers and getting the best possible price.
Promote Your Property
Once the renovations are complete, it is time to start promoting your property. The best way to do this is by using an online estate agent. Online estate agents are a lot cheaper than traditional estate agents and they will list your property on all of the major property websites.
Another way to promote your property is through social media. You can create a Facebook page or an Instagram account specifically for your property. This is a great way to reach out to potential buyers and get people interested in your property.
Staging the Property Effectively
When it comes to selling houses, first impressions count. This is why it is so important to stage the property effectively. The goal of staging is to make the property look as appealing as possible to potential buyers.
Some things you can do to stage the property effectively include:
- Furnish the property with new furniture
- Make sure the property is clean and tidy
- Adding some finishing touches such as fresh flowers and scented candles
- Make sure there is plenty of natural light
- Take good quality photos
- Use a professional photographer
It can also be a good idea to have an open house so that potential buyers can see the property for themselves. This is a great way to generate interest in your property and get people talking. You may even be able to start a bidding war among the attendees which will help to maximise your profits
Understand Taxes and Other Fees
When flipping houses, it is important to be aware of the taxes and other fees that you may be liable for. This includes:
- Capital gains tax – This is a tax on the profit you make from selling the property. In the UK, capital gains tax is 18% for lower rate taxpayers and 28% for higher rate taxpayers.
- Stamp duty – This is a tax that is payable on properties over a certain price threshold. In the UK, you will pay 2% for properties above £125,000, 5% above £250,000, 10% above 575,000, and 12% above £1.5 million.
- Estate agent fees – If you use an estate agent to sell your property, you will be liable for their fees. This is usually a percentage of the sale price.
- Legal fees – You may also need to pay a solicitor to handle the legal aspects of the sale. This includes transferring the ownership of the property and drawing up contracts.
Many inexperienced house-flippers overlook these costs and are then surprised when they eat into their profits. It is crucial to account for all outgoings when creating your purchase and renovation budget so that you know exactly how much you have available to spend and still make a profit.
Decide Whether to Use an Estate Agent
There are pros and cons to using an agent which you will need to consider. The main advantages are:
- They have experience – Estate agents know the ins and outs of the property market so they can help you to get the best price for your property.
- They have a network of contacts – This can help you to find buyers for your property.
- They can take the burden of the staging and sale off your shoulders – This can be helpful if you don’t have the time or energy to deal with it yourself.
The main disadvantages of using an agent are:
- You will have to pay a commission – This is usually a percentage of the sale price.
- They may not have your best interests at heart – Remember, they may just be interested in pushing a sale through regardless of the price.
We hope this guide has given you some useful advice on how to flip houses in the UK. Just remember to do your research, stick to a budget and identify buyers’ needs. If you don’t have much experience then it is important to start small and work your way up to bigger projects. Once you have a few successful deals under your belt, you can then start to think about bigger, more lucrative opportunities.