Flipping, one of the great money-making trends of the last property boom, is back. It is very risky but in a fast-moving market with a property shortage there is money to be made if you make the right decision. There are also many that have lost money.
Estate agent Lucy Tuong has just made a £40,000 profit from flipping. After helping a series of clients buy off-plan flats and quickly sell them on at a large premium without even taking possession.
Lucy Tuong, Sales agent of City Quays estate agents, brought the unit in March, she and two colleagues reserved a £300,000, two-bedroom flat in The Northern Quarter, a Large scale development being built in Colindale and not due to complete until 2017. In addition, you can learn useful information over here.
As the flat was bought off-plan, Lucy and her fellow investors had to find only 10 per cent of the sale price, just over £10,000 each, to secure the flat. In July Lucy sold the property on to a British couple living in London. They paid £355,000, which netted her and her 2 friends a £55,000 profit, plus their original £30,000 investment totaling £85,000.
Lucy cautions that not all developers allow flipping of new homes, and it comes with risks. “There is obviously no certainty that you will be able to sell at a profit,” he says. “We bought one of the most expensive flats in the development and knew we were taking a big risk.”
She advises flippers to investigate their chosen area and buy in a high-end scheme by an internationally known developer. Lucy also feels the quality made the flat very saleable, and the site’s strong sales had indicated keen interest.
Chen Cheng, of New Build Sales ltd , agrees research is vital. “The big danger is that too many speculators target the same high-density developments and then try to flip at the same time, and the demand dries up. Then those who can’t complete will lose their deposit.”
“Look for a property where the completion date is far enough in the future to cushion any effect that a minor slowdown in the market may have.” Flippers should buy in a popular location and it’s crucial to be close to a Tube station, while proximity to an international school or university could be a plus.
TOP TIPS: THE ART OF FLIPPING
> Always check with the developer – some have clauses banning flipping, while certain mortgage lenders also take a dim view of the strategy.
> Buy at the development’s early stages when prices are at their lowest. If you buy just a few months before completion, you give yourself no chance of riding the market upwards.
> Choose a scheme with appeal for overseas buyers, near an international school perhaps, or a starchitect design.
> Never sign up for a property without a Plan B of what you will do if you can’t sell it on.
> Don’t buy cheap and nondescript in the suburbs. The liquidity is in top-notch specifications and locations.
Flipping is a good strategy in addition to buy to let
As with all of the strategies that we teach there is both a right and wrong way to go about flipping.
If done correctly you can quickly add cash to your bank and rinse and repeat. If done wrong you’ll have big cash lumps tied up or hefty mortgages to pay months after you’d planned.