The real estate industry remains one of the best investment vehicles, and Australia’s property market is among the strongest globally. For beginners and even experienced property investors, flipping houses in Australia is a lucrative venture.
You only need to know how to do it right to make the most of the opportunity. This article shares tips to help you how to start flipping houses in Australia and ensure your efforts are profitable and sustainable.
But first, what is house flipping?
Flipping houses is a lucrative approach to real estate investment and works like any other investment property loan.
It involves buying an investment property that is undervalued, renovating it, and then putting it on the market to sell at a profit.
Most abandoned, unkempt, and undervalued houses are not attractive in the real estate market. Therein lies the opportunity to make a profit.
Therefore, property flipping is taking what appears to be run-down, unattractive, and undervalued property, fixing its many issues, and turning it into an attractive, welcoming, pleasant property investment that will fetch a profit in the market.
The fixing bit is where you will make profits, by leveraging your skills, industry know-how, and bargain-hunting.
The house-flipping process
Real estate flipping entails improving the value of an existing house by fixing what’s broken, upgrading what’s no longer appealing or fashionable, and presenting it in the best light possible.
However, as most budding house flippers soon find out, the process involves more steps than the simple explanation suggests. Find out more about how to start flipping houses in Australia with this guide:
Market research
While flipping houses is profitable, not all houses in all real estate markets are good for flipping. Ideally, aim to flip houses where your budget makes sense.
For example, high-end markets need you to have a substantial budget to manage the associated renovation costs and have the patience to sell the house at the right property prices. Therefore, focus only on markets where you can handle the associated costs and still make a healthy profit.
Business plan
You need to have a solid investment strategy to approach the house-flipping process. The business plan should cover the budget, timeline, and scope.
A plan will help you handle all steps in the process well, have reserves in case the timeline extends, and have enough money to cover emergencies and unexpected expenses.
Giving the project scope and timeline increases your efficiency and guides you to know whether the venture is worthwhile.
Financing
As a property investor, you’ll need to cover the costs of acquiring the property and fixing it. Flipping houses requires money. Therefore, if you’re using your savings, ensure you have enough to see the project through.
If not, arrange to finance from institutions that support such ventures, and understand the risks involved before taking the investment loan.
Additionally, check the interest rate and other charges on the investment property loan and ensure it still makes sense.
Contractors
You need to determine who will handle the repairs and renovations. If the house needs a complete redesign, you must work with the right professionals.
In addition, if you have experience building and renovating houses, check whether you have the right crew for the job. The latter helps you lower overall costs and gives you a hands-on approach to the project.
The house
You need to determine which house is right for flipping. Having identified the most suitable local market, go deeper and find a property that working on will not eat too much into your profit margins.
Avoid situations where the property purchase price exceeds your projected figures. You could comb the area and work with real estate agents to identify potential candidates or wholesalers for a wider scope.
It is important to be patient when looking for the right house to flip, as the rush to make a quick profit could cost you more in the end.
Fixing
You need to handle the repairs and renovations fast and efficiently, and stick to quality work. The faster you get the house done, the faster you can sell it. Thus, reducing your overall expenses and increasing your profit margins.
Also, you want to time the project and manage the schedule. Make a plan, from how long it will take to build a house to selling it.
Sell
You need to identify the right realtor to help you sell the property fast and at a profit. Ideally, work with the most experienced, well-connected, and highly reputable realtor or real estate firm in the region.
It might help to stage the house with some home decor as well to help the selling process.
Tips for flipping houses in Australia
- Treat the project like a business, where you have specific goals and profits to attain. This will help you remain objective and only consider the best options.
- Select the right property. Everything else is secondary to this step, as it determines how much work you need, and how much you can make from the project.
- Organise your finances well because you can easily miss making profits despite presenting a high-value property.
- Stick to market trends where your renovation decisions are based. Stick to what the market demands, not your personal preferences.
- Manage your costs well. This calls for sticking to the business plan, constantly monitoring all events to ensure you don’t deviate too far from the plan, and finding ways to cut costs.
