Flipping Houses And How To Get Started

A property investor report compiled by CoreLogic last year highlighted the fact that investors own nearly one third of properties in Australia and a great majority of these are rentals.

With so many people investing money into property in Australia, it’s no wonder that shows like The Block and House Rules are so widely watched. They provide inspiration for investors to ‘do-up’ properties and sell them at auction shortly after, with the aim of netting a profitable sale price.

Known as ‘house flipping’ the process of buy, renovate, sell is an extremely popular way for savvy property investors to (hopefully) make big bucks - and quickly.

But how risky is house flipping and can anyone do it?

House flipping can be a good money making venture if you know what you’re doing, but you do need to be able to handle a certain level of risk and have good DIY renovation skills.

Melbourne house flipper Tom Hall who has bought, renovated and sold 5 houses in the past 10 years, suggests starting small because there’s less risk. Hall initially saved up a deposit for a one bedroom apartment in Carnegie, renovated it and sold it for double the price in three years.

But not all house flippers start out small.

Vicki Morris, quit her job as a high-powered marketing executive to flip houses for a living. Her first project was a $380,000 3 bedroom home on the NSW Central Coast which Vicki renovated in six weeks and promptly put straight back on the market. It sold shortly after for $530,000 netting her a cool $65,000 after expenses.

Unlike Tom Hall, who is now involved in making major improvements to properties, Vicki has up until now concentrated on cheaper cosmetic improvements that deliver maximum impact.

Cosmetic improvements can include:

• a fresh coat of paint,
• replacing the flooring,
• replacing the lighting,
• increasing curb appeal,
• and constructing an outdoor entertaining area.

But Vicki admits that she wants to get into structural renovations “ultimately I want to be able to do something that is more meaty, a bit longer and will give me more return.”

A new type of flipping

If flipping a house in six weeks sounds like too much hard work, money and effort, there is always another option - buy, renovate and rent.

This is what Vicki did with her second property - a $460,000 4 bedroom - after seeking advice from her tax accountant who advised her to hold onto it for capital growth.

Cherie Barber, renovation expert and founder of Renovating for Profit , agrees:

“If you buy, renovate and rent, that is what will make you wealthy,” says Cherie “The rent you receive from your tenant will cover the mortgage costs and you will make a lump sum profit in the renovation. What ultimately makes you wealthy is the long-term capital growth.”

Ho to get started flipping houses

If house flipping, either the traditional or new way, is something you want to get into, then keep these 3 tips in mind when you’re starting out:

1. Get a good deal - house flipping experts say the best capital gain is made from buying at the right price, so do your market research thoroughly to make sure you to get a good deal and only pay what the house is worth. The lower end of the market is less risky and attracts more buyers.

2. Renovate for a target market - always keep your target market in mind, and don’t overcapitalise on your fixtures and fittings. Aim to spend 10% of the current property value.

3. DIY and style - successful house flippers always use DIY where possible to keep costs down, and say fabulous home styling is the key to achieving a quick sale and the best price.

Doing up homes and selling them off? Investors don’t waste any more time – list your property on Bricks+Agent today !

Download our renovation budget tool to determine what areas to focus your budget to maximise your sale price.