If you’re looking to renovate a property for the sole purpose of trying to flip it, these tips from a bargain hunter might help you out.
Investing into a property to renovate it and sell it off is an aggressive strategy which has proven profitable for those in the know.
Dominque Grubisa, founder of the DG Institute and a guest who has appeared on the Smart Property Investment Show previously, shares here top tips for investors to get into the flipping game and make some money while they’re there.
Like with all investment strategies, investors interested in flipping need to make sure they do their homework before jumping into any property.
“Where do people want to live right now? What kind of properties do they want to buy? Don’t speculate about up-and-coming neighbourhoods,” Ms Grubisa said.
She also recommended researching into distressed properties, as they can be an affordable option.
“Divorces, deceased estates, bankruptcies and properties that are heading into foreclosure are a good place to start,” she said.
After the groundwork is set, having a plan will make sure flipping investors will be able to mitigate any potential risks. It's a vital step of the process that many investors skip over.
“Flipping properties is a form of active investment. Successful real estate investors are those who understand all the risk factors involved and know how to efficiently eliminate or reduce its impact,” she said.
By laying out all the factors that can influence the sale price and resale value, you’ll know whether the flip will be profitable. For Ms Grubisa, the only worthwhile flips are the profitable ones.
Surprisingly, many investors don't do the maths before jumping into a renovation.
“Calculate your costs and profits – what could you pay for and still make an acceptable profit given your anticipated sale price? I recommend estimating the cost of home improvements, which increase a home’s value. This includes repainting the home’s exterior, installing additional closet storage space and adding green energy technologies,” she said.
While some investors may cut on costs by trying to renovate by themselves, Ms Grubisa said unless they have the skills to do so, it’s better to leave it to the professionals.
“Unless the individual has a background in building or construction, a solid understanding of council regulations and the knowledge and skills to execute the renovations, professionals need to undertake the changes,” she said.
Want to learn more about renovating? Check out these inside tips from our experts