Flipping houses, if done right, can bring in huge profits and help you make bigger profits. Flipping involves buying a property at a low price, investing in renovations, and selling it at a premium price. Not only is it a lucrative business, but it has other benefits too. If done right, you can remodel and remodel old or low-value properties, increasing their value. In this way, flapping helps you turn around stagnant inventory and give it new life.
Reselling may seem easy, but it requires the right approach and careful planning to make a decent profit.
Here are some proven strategies you can employ if you are looking for higher returns.
Market Pulse
Before investing, it is important to know the trends of the market. Real estate investment always requires detailed planning and strategy and you have to do a lot of homework. Rushing into it can be counterproductive and will not give you the results you need. Knowing and learning about the market requires tracking trends, learning more about the drivers of demand, predicting future price fluctuations and forecasts, etc.
Find the right property
Once you have a thorough grasp of the market, it's time to identify the right property option. You might have several options but as an experienced real estate professional, you need to narrow down the most suitable one. While assessing the property price, you should follow the 70% golden rule. According to this rule, you should not pay more than 70% of the proposed selling price minus renovation costs. For example, if you are planning to sell a 2BHK apartment for ₹800,000 and your renovation/refurbishment costs are ₹150,000, then the cost of the property should not exceed ₹410,000. Negotiation skills are also important here to avoid overpaying for the property.
Spend money strategically on a makeover
The premium you charge for a property is primarily driven by renovations and redesigns. You need to spend money wisely to renovate your property strategically, functionally, and aesthetically. Hire talented people who can increase the value of your property and make it more marketable. Giving it a new look with enhanced paint, décor, security features, furniture, flooring, etc. can significantly increase its market value.
Redesigned for high demand assets
During renovation, you can also consider redesigning it into high demand assets such as student accommodation, bachelor accommodation, rental properties etc. which have high market demand. Redeveloping and redesigning the property into a new asset type will naturally increase the market value. Take for example the organised student accommodation market which is growing at a phenomenal pace. According to Colliers, by 2036 India will be home to 31 million migrant students. Such huge market demand will naturally increase the asset value.
Reselling a property
As a final step, you will need to resell the property. Negotiation skills are essential here as well, as they will help you get the best profit. Your goal is to sell the property for the highest price. Patience is also important, as reselling is not always easy and can be quite stressful.
However, with the right approach and a carefully planned strategy, you can reduce risk and maximize your return on investment.
The author is Director of RPS Group.