Many properties in the market will seem like the best investment choice. But for the inexperienced flipper, information overload and weighing the pros and cons from one development to another can get confusing. For those still in the process of gaining experience in real estate investments, what would be the key items to take note of to make the best profit on a residential property flip?
1. Betting on pre-selling units as a first-time feat
Being a newbie in any field is stressful enough. While learning the ropes in real estate flipping, it would be wiser to bet your hard-earned cash on an already existing property. A tangible purchase with a clean title will bring peace of mind and a clearer picture of the next steps to take in turning an investment into profit in the least amount of time.
2. Check on the property’s current condition and history
Understanding a property’s history is crucial before investing. Ensure full disclosure on issues like past deaths on the property, title disputes, or a history of flooding. Conduct due diligence on the developer and inspect the foundation’s condition before finalizing your purchase. Additionally, thoroughly check interior systems such as plumbing and electrical to avoid costly repairs that could reduce future profits.
It’s also worth considering Feng Shui, as some buyers take it seriously, regardless of personal beliefs. These factors can significantly impact the property’s value and attractiveness to potential buyers.
3. Scan the location and neighborhood
Location is a critical factor in real estate investment, and finding the ideal spot requires thorough research and site visits. The “sweet spot” is an area on the rise but not yet oversaturated. Consider whether the community is secure, conveniently located, or more isolated.
It’s also important to check if the property is near a creek, which could pose flooding risks during typhoons and potential health hazards like Dengue fever. Additionally, the direction the house faces—whether it catches the cooler morning sun or the warmer afternoon rays—can impact future energy costs.
Other factors to evaluate include proximity to flight paths, fault lines, highways, and cemeteries, as well as access to hospitals, commercial areas, and schools. These elements can significantly influence the property’s price and overall value.
4. New doesn’t necessarily mean better
You’re bound to find the best deals among the unattractive fixer-uppers sitting on more valuable land rather than a brand-new property in a low zonal value area. A trained investor knows how to find the “diamond in the rough” that will bring maximum returns. Although this might require a bigger budget for improvements, it promises a better and faster ROI.
5. Little improvements significantly raise a property’s value
The kitchen and bathrooms are often the key factors in closing a deal for buyers. A clean, modern, and functional kitchen gives potential owners the confidence to move in, knowing the busiest part of the home is ready. Similarly, well-tiled, freshly grouted bathrooms with shiny fixtures create a brand-new, sanitary feel, avoiding the impression of a previously used space.
Interior upgrades don’t need to be drastic—small changes like allowing more natural light or updating old window treatments with minimalist glass partitions can instantly refresh and modernize a space.
6. Consult experts or do research before making improvements
If there’s an allotted budget for property improvement, consider a universal and widely accepted interior instead of a customized look. Choosing neutral colors and generic but tasteful fixtures will help broaden your potential market. If you don’t trust your taste, ideas are a click away, better yet consult a design expert. You may find a reputable contractor or architect for stress-free renovations.
7. Factor in the taxes and fees to your purchase price
When deciding on a sale price, always remember that taxes and fees such as broker’s fees need to be covered. This is to ensure that the profit you have made, the net of these transactional expenses, would make your investment worthwhile.
8. Hire a trusted broker and agree on the broker’s fee first
Entrusting the marketing and sale of your property to a reputable broker or brokerage firm will take a huge load off your back in finding good clients interested in the property you put on the market. They can filter potential buyers for you and coordinate viewing schedules at your convenience. They play a pivotal role in a seamless closing and ensuring all documents are properly drafted and all taxes are taken into account.
9. Make it “house tour” ready during viewings
A well-lit, clutter-free space is key to attracting potential buyers, allowing them to better envision living in the property. Engaging the five senses can enhance this experience. For instance, the aroma of brewed coffee in the kitchen or the scent of freshly baked cookies can make the area more inviting. Similarly, placing scented candles in the bathroom can draw attention to its improvements.
Small touches like a simple flower arrangement create warmth, while soft background music helps buyers feel more at ease. These thoughtful details encourage immediate consideration of a possible sale.
Take note of interest rate fluctuations
As of late August, the BSP has lowered interest rates and is forecasted to lower rates further as we get closer to the end of the year. As rates go lower, the cumulative cost of purchasing a property through financing becomes more attractive. As such, you should consider the timing of your property purchase and target exit period to determine how attractive bank rates will likely be during your forecasted timeline.
Some wise folks have said that success is a byproduct of excellence. Thus, if you focus on excellence, success will organically follow. The same can be said when it comes to seeking success in buying and selling properties. Though there isn’t one definite way to be a real estate expert, these ten tips will surely help make your way to becoming a successful home property flipper.
