Recent research from Hamptons International showed that one in every 40 homes sold in England and Wales were bought and sold within 12 months.
The research suggests a new 12-year high in the number of homes in England and Wales which have been bought, refurbished and sold.
The mini-boom in house prices has not just pushed up values of turnkey properties ready to move in the average difference between the purchase and sale price of flipped properties at the highest level since records began in 2007 – now standing at nearly £41,000.
Investors are sensing an opportunity too good to be missed. Profits have seen a boost as investors have switched from flats to houses, encouraged by the lockdown experience of wanting more space – both inside and out.
The difference between the purchase and sale price of flipped properties are at the highest level since 2007, standing at nearly £41,000.
Key decisions for investors
When it comes to any refurbishment or ‘flip’, it is important to identify your target market and ensure the property appeals.
As an investor, it can be easy to get too emotional about investment purchases by spending too much time and money on the refurb or leaning towards personal tastes.
Examples of tailoring your purchase to a target audience could be:
- If you target young professionals or students sharing a property, make sure bedrooms are similar sizes, so no-one is left with a small room.
- Consider local amenities, such as access to public transport, shopping, cafes etc.
- If it’s a family home, make sure there is space for a children’s playroom or at least a play area and try to squeeze in two bathrooms or a big main bathroom. Try not to overspend on expensive wood flooring or carpets if your targeting families.
- If you are buying in a block of flats, try to find one with a lift if you’re looking at a higher floor. You reduce your market dramatically if you go high without easy access.
Set a realistic budget
To understand your costs and possible resale value, studying the local market and looking at the baseline as to what similar properties sell for can be a good place to start.
Some investors focus too much on the highest value a property has achieved to align their expectations. However, this is not an efficient way of planning as so many factors could have gone into that sale, including market conditions, how long it was on the market for or who the specific buyer is.
Flipping is so popular in the property market that some investors are making the error of rushing a purchase. Patience is the key to ensure the highest quality. It is also important to consider skilled labour, even if this requires more cost. Some investors who are refurbishing try to cut costs by doing work themselves. Sometimes this can be noticeable when trying to sell, leading to a longer sale or reduction in value.
Looking for finance for your project?
It can be difficult to access BTL mortgages from high street banks as they are not likely to lend on uninhabitable properties or cannot provide funds within the required time-frame. This can lead to investors missing out on golden opportunities or leaving unfinished projects at a standstill.
This is where Bridging Finance can be useful; it enables investors to purchase properties quickly and gives them time to make renovations before applying for a BTL mortgage.
A bridging lender can make decisions quickly, sometimes releasing funds within a week. A bridging loan makes buying a property at auction or being quick with an offer is much more achievable.
If you’re thinking of starting ‘flipping’ or already an investor who does, the right bridging loan can make the whole process a lot smoother.