Formulating an effective plan for flipping properties
What is property flipping? Property flipping refers to purchasing a home which is not in good condition, and carrying out upgrades and renovations, followed by selling it off for a profit. This may seem very simple on paper, but property flipping is far more complex and to be carried out only after considering many factors and after extensive planning. Let us look at how to formulate an effective plan for property flipping.
The first thing to set is clear objectives and deadlines. Vague objectives and deadlines are very similar to shooting in the dark. Once your ends are clear, you can work on realistic ways to achieve them. Realistic means cannot be worked out unless your goals and deadlines are clear. Another important thing to consider while formulating your plan is an exit strategy – what if things don’t work out according to plan? You may have to work out alternate strategies like renting out the property until the market improves. One must be pessimistic while formulating the plan, and not wait until the unexpected happens. One must be prepared for the unexpected, as well as all the risks involved in property flipping.
Working out a detailed and realistic plan will also help you get financing for the flip. How do you convince lenders that you can carry out a profitable flip? This is where showing them your plan can help. You will prove to the lender that you are not just a ‘dreamer’ but someone who knows how to achieve his objectives. A solid plan complete with exit strategies will always inspire credibility. Your plan must begin with a summary. After that, you should have a section devoted to market analysis – you should be able to explain why the neighbourhood you are targeting is ideal for investing in. You should provide data like demographics, recent developments, etc.
Property flipping is all about buying low and selling high. The profit is made during the purchase itself. Your plan should cover how you will go about finding the right properties and buying them at the right price so as to create a good profit when the time comes to sell them. You will also need to cover how you will go about preparing the property for the sale, and how you will go about marketing it. If you are planning on focusing on certain types of houses – for example, apartments, villas, etc., make sure it is specified in the plan. The plan should cover financial projections as well. Property flipping is all about having the right team-members – real estate agents contractors, etc. You must plan on how you will go about building this team.
You need to proceed with property flipping only after consulting with professionals like real estate agents, contractors and financial analysts. One should not make the mistake of seeing property flipping as ‘easy’ or as a shortcut to wealth. While it does help in building wealth, property flipping should be carried out only after thorough research and consultation with the experts.
Resources: WMA PROPERTY