So, in the last couple of weeks I have been asked about flipping houses!
When I say flipping houses I’m on about buying and selling within a timeframe, sometimes with refurbishment and sometimes without. So here are a few basics.
- Flipping works best when buyer demand is low and property supply is high.
- Flipping works best when purchasing using cash. If you are looking to flip a house within 12 months using finance, a bridging loan will be required.
- Flipping works well when material costs are low and supply of these materials is constant.
- Flipping works well when the conveyancing process is slick and fall throughs of completed sales are minimal.
- Flipping really works when house prices are moving upwards quickly.
The more of these things line up the better chance you have to make a profit. So where are we in the local market at the moment?
- Supply is lower than average and demand from buyers is high.
- Cash needs to be traceable else it will not pass Anti Money Laundering checks.
- Bridging loans are more expensive than buy to let mortgages.
- Buy to let mortgages will need to run at least 12 months before another buyer can use mortgage finance on the same property.
- Material costs are up 20% to 30% and supplies are inconsistent.
- The conveyancing process is oversubscribed.
- House prices are moving forward at pace.
Like most things in life, choosing when to flip a property is all about timing.
You may come across an opportunity to flip a property where more of the above line up than do not, if you need any help in understanding the value of a home pre-flip and post flip, call us here at Tortoise Property Limited on 01733 592020.