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Property flipping is a venture worth pursuing if you want to build wealth. It involves purchasing a property to sell for profit rather than live in it. However, flipping is more than just buying and selling properties.
Three golden rules govern effective real estate flipping. Remember these to ensure that you get the highest returns possible:
- Buy low, sell high
- Renovate wisely
- Minimize holding costs
When you put in the time and effort to follow these rules and educate yourself about the real estate market, you become unstoppable in maintaining a steady income through property flipping.
Buy Low, Sell High
Supported by strong economic growth, real estate prices in the Philippines will only keep growing. The good news is that you can still buy properties at lower prices by considering foreclosures.
Foreclosed properties are houses and lots, condos, or vacant lots that have been taken over by lenders because the owners failed to make payments for the loan. Foreclosures are often priced below market value so lenders can recoup the costs quickly and minimize losses.
Once you find a foreclosed property to work with and finish the necessary renovations, you need to determine the After Repair Value (ARV) of the property and ensure this value is higher than your total costs. To be sure, seek help from a real estate appraiser when setting a fair market value for your flipped property.
Pro-tip: Consider buying a property outside Metro Manila, where prices are typically lower but demand remains strong, according to the latest Lamudi data.
Renovate Wisely
In between the processes of buying low and selling high, you need to renovate wisely. Renovation is one of the most crucial steps in property flipping, especially if you’ve chosen a house and lot or a condominium unit. You want to boost the property value so you can sell it at a price higher than you paid it for. The catch is to make sure you don’t renovate everything.
Early on in your flipping journey, choose a property with main areas that are already strong and functional. These include roofing, foundation, and plumbing and electrical systems. When those are sound, look for improvements you can make that are affordable but offer high returns.
For example, giving the property a fresh coat of paint can establish a strong first impression. Choose a neutral color to entice a large buying audience and sell the house quickly. Consider doing kitchen renovations as well because this is a high-traffic area in most residential properties. Do not replace everything, only those that are old and worn. To save a few hundred or thousand pesos, you can just repaint kitchen cabinets instead of replacing them if they still function well.
Pro-tip: Stay updated on the popular amenities among property seekers so you can get more renovation ideas.
Minimize Holding Costs
Real estate investors know for a fact that the longer you hold on to a property, the higher its future value will be. For real estate flippers, however, the situation is quite different. Selling the property as quickly as possible is crucial to minimize holding costs.
Holding costs refer to expenses you incur while the property is still in your possession. These include property taxes, utilities, maintenance, and insurance, among others. To speed up the process of selling your renovated property, you may want to work with a licensed broker with a strong knowledge of your neighborhood. Property portals such as Lamudi can also help you advertise your property to millions of active seekers.
Pro-tip: When selling your property online, make it a priority to take great photos and emphasize the best features of the space.
Flip for a Fortune at the Lamudi Property Fair Cebu
The upcoming Lamudi Property Fair in Robinsons Galleria Cebu is the perfect opportunity to start your real estate investment journey. Happening from August 16 to 18, 2024, the event will bring together some of the best property deals on houses and lots, condominiums, and foreclosed properties in the country.
Live attendees will also have the opportunity to win exciting raffle prizes, get exclusive discounts, and participate in learning sessions with top developers. Expect a wide range of property deals, informative presentations, and expert developer representatives to help you make smart buying decisions.
Register for free at https://www.lamudi.com.ph/journal/.
