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How To Flip A Property?

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Flipping houses in the UK has become a popular method of property investment. A survey conducted by the finance brokerage firm FinBri revealed that 75% of investors who had flipped a property earned more than £10,000 in profits.

Even those who didn’t make that much still made a profit, with 92% of investors in the study generating some overall gain from the deal. So, if you’re thinking of flipping a property, how do you start? What steps should you take to ensure success?

Is property flipping worth it? Are there any flipped property rules you should know about? This guide will answer all your questions.

Table of Contents

Understanding the Practice of Flipping Houses

To understand how to start flipping properties, it’s important to learn the terminology, particularly the meaning of flipping. So, what exactly is flipping houses? It simply means buying and quickly reselling a property at a higher price.

The aim is to buy the property at the lowest possible price, do some quick renovations, and sell it at a much higher price to make a profit. Your potential profits are calculated as with any other investment. To find the gross profit, subtract the purchase price and any repair costs.

There are taxes to consider. Some people set up a limited company to flip properties, in which case, you pay corporation taxes. Otherwise, you pay individual taxes on each profit made.

Fortunately, there is one tax you don’t have to pay. If you’re flipping houses, you don’t need to pay the capital gains tax UK investors usually have to pay, as HMRC doesn’t consider property flipping as an investment.

Flipping Property In The UK – How it Works?

If you’re interested in house flipping, you should begin by researching the area you’re considering. It’s important to know the prices of homes and how much you can potentially make from the venture.

The goal is to make more than you sell, which can only be done in places where homes have good prices. In 2022, one study found the top three UK locations for house flipping were Manchester, Nottingham, and Liverpool.

You should also keep an eye out on websites such as Rightmove and connect with local estate agents to find the most profitable areas. Look for places with good transport links, schools, and green spaces. Additionally, be aware of any potential planning issues that could affect the property’s value.

Next, you’ll need to secure financing. Cash is the best way to invest, but if you don’t have the money, you can take out a loan. Buy-to-let mortgages are not suitable for flipping houses, so you should consider a bridging loan.

This type of loan is short-term and can be pricey with high interest rates and fees. It is also secured borrowing, so you must put up an asset, such as property, against it.

Once you’ve purchased the property, you need to make an improvement plan. Think about who your target audience is and what features will appeal to them. Create a budget, keeping in mind that the goal is to sell the home for as much as possible.

Decide what you can handle on your own and what requires specialist help. You may also want to hire a project manager or contractor to oversee the project. Finally, determine a timeline to pay back the bridging loan, and then you can sell the home.

How To Flip A Property
If you're flipping houses, you don't need to pay the capital gains tax UK investors usually have to pay, as HMRC doesn't consider property flipping as an investment.

A Note About Building Your Team

You’ll need a lot of people to help you out with the purchase and flip of your home. An estate agent or auction house can help you buy the property.

A lender or broker can provide the necessary financing. A contractor, or even a whole team, is essential for the difficult parts of the job. And to sell the home, you’ll need assistance, whether from an estate agent or a conveyancing solicitor.

It’s beneficial to start gathering your team even before you purchase the property. This way, you’ll be ready to act quickly when you find the right property and you won’t be held back by slow service.

You can find people to work with at investor events or online forums. Make sure to check each of them out thoroughly, so you don’t end up with a contractor who doesn’t know what they’re doing or an estate agent who can’t sell the property.

How To Make the Sale After You Flip a House?

After you’ve completed the challenging task of renovating or flipping a property in the UK, the next step is to sell it.

To do this effectively, you’ll need to make it look like a home with staging. You can rent furniture at an affordable cost to make it more appealing to buyers.

Studies show that empty homes are much harder to sell than those with furniture, as it’s difficult for buyers to imagine themselves in the space. Although renting furniture may be an extra expense, it’s a worthwhile investment.

When you have the house ready, you can either list it with an estate agent or try to sell it on your own. Although an estate agent may cost more than handling the sale yourself, you don’t have to worry about marketing or showings.

Consider both the cost of an estate agent and the time you’ll save when making your decision.

Set a fair price for the property and be prepared to negotiate, and you’ll soon have a successful flip!

Any thoughts about selling your home?

Are you looking to sell your house? We buy houses in any condition. Get in touch if you are thinking of selling.

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