Property flipping is the process of investors purchasing a property at a price below market value, then re-selling quickly at a profit. The below market price can be for any number of reasons, for example, the property is in need of major renovations.
Investors use flipping in communities to purchase a discounted property
whereby the property is in a state of disrepair. In areas such as these, properties are often offered at below market value and the surrounding area is generally in a rundown condition. Flipping is used to increase the value of the area and produce economic growth within the area by investors purchasing a number of properties. This in turn will increase the value of the properties, once renovations have completed and the re-sale value is closer to market value. This encourages communities to flourish with families and has a knock on effect for the wider area.
Recognising a way to make a profit, flipping has now become booming business. Companies like As Is Now are available who will purchase your property regardless of its condition at below market value. Vendors have a number of reasons for wishing to sell the property quickly and the convenience of a company who will project manage the conveyancing, removing stress of endless viewings and fear of offer withdrawal. This can be particularly useful in the event of vendors having to relocate to another area. A company can also relieve the stress of pending repossession.
Property flipping may appear to have an element of risk in the current housing market. Investors may be wary with the current lending criteria being stricter and more regulated following the financial crash of 2008. With repossessions at an all-time high, there are properties available for purchase and an astute flipper can still snag a bargain. It is important to note that flippers will need to do their research and ensure that they can flip a property quickly and at a profit. Careful thought is needed and investors who have access to credit are wise to research and look at the surrounding area. This is important for future market value and to profit, this relieves the risk of investors being property heavy and running into problems.
Flipping has pitfalls. More commonly known in the UK, for MP’s using flipping to take advantage of tax allowances, it has become quite a scandal infuriating tax payers. This process of flipping involves a second home closer to London aside from their constituency. Flipping the second property involves renovating the property and claiming the cost of the expenses from the public purse and selling the property to avoid capital gains tax. However, important to note that flipping to avoid capital gains tax is not solely used by MPs. Anyone who can afford a second home is able to use this loophole to their advantage.
House flipping takes time, patience and money. It is easy to make expensive mistakes, but with the right advice, an investor is able to make a profit. House flipping is a business venture and like any other business venture it is wise to research all avenues and invest wisely.
If you are looking for great below market value properties visit investors.nationalhomebuyers.co.uk