The Business of Property Flipping

The Business Of House Flipping

It looks very easy! Buy a house, upgrade its features and put it back in the market for profits. There’s more to property flipping.

A property flipping is a real estate investment business strategy whereby an investor purchases a home with the intention of reselling it immediately for profit.

Approaches to property Flipping:

-Investors target distressed properties: These properties are generally considered to be good deals because of the selling price which is usually lower.

-Properties that requires Renovation: Properties with defects are always sold at a very considerable price. Of which, any investor that opt for this type of property will have to renovate it in order to increase its value in the marketplace 

-Investors add value to the properties and resell immediately for profits

There are 2 types of flippers:

We have the wholesalers and the retailers 

The wholesalers locate good deals, assumes the risks and sell to retailers. Basically, they sell to retailers for profits. Whereas the retailers take the most risk, they buy from wholesalers, fixes all repairs and sell it quickly.

The business of flipping houses requires a lot of expertise. The investor has to be acquainted with:

-General knowledge on the property market

-Knowledge on house renovation 

-All improvement cost required during renovation

-Ability to spot good deals that can sell out faster

-Ability to Negotiate property prices

The greatest mistake a flipper can make is to overpay for a property. It is always advisable to work with an experienced flipper or a contractor.

Finding Deals:

This involves finding motivated sellers who are willing to sell at a discounted rates and accept unusual terms. These are mostly seen in distressed properties. This skills takes years to master since not all distressed properties are best deal. It is usually advised to work with a professional real estate consultant to evaluate the market and get the best deals

Exit Strategy:

As a flipper, getting back your funds and profits is your utmost concern. You must know how to sell off your property quickly, who to sell to, or introduce it to and how long you can hold your property.

To Illustrate:

Supposed you were called upon to acquire a distress duplex at Ikoyi,Lagos. The listing price is N300M. This property requires renovation, you calculated the cost of repairs and improvements to amount to N30M. The value after repairs is N450M. You presented an offer of N270M which was accepted by the owner. Now, you are to pay N300M for the property including the cost of repairs and sell at N400M-N450M after repairs. Your profit will be around N100M-N150M. Kindly note that property flipping is a short term investment.

This is no doubt a very good business with a great profit margin. First; You didn’t overpay for the property because your purchase price was less than 70% of the after purchase value.

Here you have another choice;

Acquire the property as a wholesaler for N270M, since the owner already agreed on your offering price, then you can sell to a retailer for N310M-N320M maximum, he handles all renovations and improvements. Here, you make a whooping profit of N50M as the wholesaler and the retailer buys at N320M, improves the property with N30M, that’s spending the total sum of N350M and he resells at N400M-N450M. He makes his own profit ranging from N50M-N100M✅.

There are untapped opportunities in flipping properties, either way, it comes with a great profit margin. If you wish to start with an affordable property or properties in a highbrow area, either way; property flipping is very profitable if done rightly.

QLB LUXURY HOME is very opened to helping you locate the best deals, if you’re seeking for best properties to invest or acquire, we can help you find the right property that suits your interests 

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