When is the best time to flip a property?

By Greg Bell

There are many different methods of making a return on your initial investment or ROI. Flipping houses involves buying a property for low-price improvements, and selling it for more than the purchase price and upgrades combined. But this methodology takes skill, intuition and industry knowledge as well as good timing. Here are some tips on knowing when the best time to flip a property will be.

Create a strategy

As with most investment strategies, it's important to keep a stern eye on your bottom line and creating a reliable strategy can help you reach your goals. A flipping house strategy takes knowledge of the housing market, home renovation as well as financial literacy. For example, you need to understand what certain home improvement tactics will cost in order to maximise your bottom line. Ask yourself things like "How much money can I spend to make improvements?" and "What kind of profit do I want to make?".

Focus on capital gain

At the end of the day, house flippers need to make an overall gain to continue with this investment strategy. The last thing you want is to buy something cheap with little resale value and pour money into it trying to make it a viable option for the market. There is a well-known rule within the house-flipping industry known as the "70% rule."

The rule basically means that you should not pay any more than 70% of the after-repair value (ARV) of the piece of real estate subtracted from the amount of money it costs to make the renovations. This is a good method that will help you focus on potential capital gains, which is any profit realised from selling an investment.

Watch ceiling prices

If you are interested in buying a property and flipping it, you'll know that it's the right time when the area you are buying in is conducive to making a profit. Watch the market and know what the max selling price of houses in the region is going for. This can let you know how much the potential flipped house could sell for if you renovate it. Don't buy the property if it won't sell for the amount you need to make a profit.

Pick the right property

It's important to understand what kind of real estate is the best for your flipping investment strategy. Whether it's a residential home or a nice apartment unit with lots of potential, picking the right investment is important. That's why it's so important to speak with experts who can guide you in the right direction in accordance with your goals. Keep in mind things like building, material costs and time restrictions will also impact your investment.

Are you ready to dive into the world of house flipping? Reach out to Ray White Surfers Paradise to get started with your investment strategy today.

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