4 Benefits of Flipping PropertiesMany investors choose to invest their time and money into properties which are below market value, and sometimes in poor condition. This is the preference of many investors as it presents them with the opportunity to add clear value to the property. The aim of adding value to these properties is to earn a greater profit in return.
With many properties available for investment being in poor condition it is often the case that a full renovation is needed. When this situation is met an investor adopts a flip strategy for their investment.
Flipping properties can be time consuming and expensive, therefore an investor must be prepared for everything that accompanies a flip investment strategy. The beauty, however, are the benefits this style of investment presents.
In this article we will explore four key benefits offered by flip investments.
ProfitInvesting in property is a decision and commitment that has the potential to bring the investor a great deal of benefits. This is not without its risks but often the benefits presented by an investment outweigh these.
By investing in a flip property investment, investors gain the opportunity to earn a large profit, typically in a shorter period than other forms of investment earn back their returns.
This is a fantastic advantage for an investor as they can commit to their investment and after adding value, and meeting the requirements of their plan, the investor can expect to sell their newly renovated property on and gain a substantial profit.
The following property began as a one bedroom apartment. This property had a kitchen recess which with our investor and renovation team, we worked to convert this into a master bedroom with an ensuite.
The recess of the property was then renovated into a kitchen which became open plan with the living room. With the property now being a two bedroom apartment, with a master en suite, our investor experienced an approx. profit of £14k.
ManagementAs previously highlighted, investing in property is a huge commitment, not just financially. This is essential to keep in mind when choosing to enter the world of property investing. Many property investments demand large amounts of management, however, previous experiences have demonstrated that this is not efficient for some investors.
Many investors are money rich and time poor, meaning they do not have the same freedom to manage a property investment from start to end. With flip investments this disadvantage is lowered as the time period is reduced.
Working on a flip investment only requires attention during purchase, renovation and sale. After a flip investment has been sold the investor no longer has any involvement or worries. This means they are then free to enjoy their profits and face their next challenge.
DiversityThere is strength in diversity. By working towards building a diverse property investment portfolio investors present themselves with more opportunities. Think of it as not placing all of your eggs in one basket.
By diversifying your portfolio you can essentially lower your risk. Ultimately, this means if you are an investor of three buy to let properties and something in the market suddenly affects buy to let investments you may be doomed, however, had you added two flip properties and another style of investment to this portfolio you would then have this to fall back on and support you through.
Portfolio diversity is not unique to investment strategies. This is an important point to consider in regards to locations, property types, markets and more.
ConclusionFlipping properties takes careful consideration and patience. As a flip investment can typically require a full renovation of the property, bringing it back to life, the demands it yields are intense.
With this being said, flipping a property is the preferred choice of many because of the advantages it equips them with.
Investing in a property with a flip strategy can be incredibly beneficial to an investor as while the initial sum of securing the property is a huge financial commitment, it is a strategy that plans to earn your money back with clear profit in the end, and often in a short period of time.
Many investors are time poor, meaning they don’t have the means to focus their attention on a particular task for a lengthy period of time. Flip properties present the opportunity of a quick turnaround - buy, renovate, sell - freeing investors time to move onto their next investment.
Experienced investors will know that one of the keys to being successful in property investing is to be diverse. By diversifying their property portfolio regarding properties, strategies etc. investors can appeal to many, potentially establish greater security and possibly achieve greater results.
Disclaimer: This is information based on our knowledge gained throughout years of experience, education and learnings. This information is open to interpretation, therefore, you must carry out your own due diligence regarding the subject.
Robert Stammers. (2021). Should You Buy and Hold Real Estate or Flip Properties?. Available: https://www.investopedia.com/articles/mortgages-real-estate/08/flipping-flip-properties.asp
FlipperForce. (.). Benefits of Flipping Houses. Available: https://www.flipperforce.com/how-to-flip-houses/chapter-1-is-flipping-houses-for-you/benefits-of-flipping-houses
First Bank. (.). The Benefits and Risks of Flipping Houses. Available: https://localfirstbank.com/article/the-benefits-and-risks-of-flipping-houses/