Real-estate is one of the few industries to thrive in 2020. Entrepreneurs across the UK are investing in the real-estate game to make money quickly. Real-estate is a fast-paced, innovative industry that requires a business mind and creative streak.
Real-estate was the third most popular industry for new businesses to register into last year. According to data published by Companies House, 468,371 new businesses were registered in 2020, and 16,747 of those businesses were ‘buying and selling of own real estate.’
So, what exactly is ‘flipping’?
‘Flipping’ a house is when someone buys a property for a low value and aims to sell it for a higher one to make a profit. Sounds easy enough, right? Unfortunately, there is a minimal market for houses that have the potential to make a high profit. The available properties are highly sought after, making it difficult for new businesses to enter the flipping game.
The flipping concept is based around selling a house quickly, rather than waiting for the market and property value to go up over time, producing a long-term profit. Flippers look for properties that can appeal to a range of buyers, like young families, professionals and couples. Instead of opting for a trendy niche flat, business owners want a semi-detached house in a good area that can be modernised quickly. In fact, only 5% of homes bought and sold last year were flats – marking a staggering 15% drop from 2019.
In 2020, one in every forty homes was bought and sold within 12 months. It is predicted that 23,000 homes will be flipped this year alone, and investors are set to make even greater profits.
However, as with most industries, investing in a property requires a specific set of skills. First, you need the vision to identify when a property has value and what it can become. You need to be able to negotiate a suitable buying price and, for cheaper properties, navigate an auction. Once you have the property, you need to be able to manage the project. There are contractors to employ, refurbishments to be done, time limits to be watched, and standards to be. Real-estate can be time-consuming and expensive for new business owners.
The location of your property can significantly impact the profit you make. In 2020, Burnley and Lancashire were the most popular locations to flip a property. One in twelve Burnley homes were flipped within 12 months last year, and the average profit was £20,643. The properties were mostly terraced houses in Burnley, purchased for less than £40,000.
However, the national average difference between purchase and sale price of flipped properties is actually £40 995. That is a whopping £10,000 higher than the average profit in 2019. To increase a property’s value, consider installing fitted wardrobes, a smart kitchen, and a freshly landscaped garden. Make sure the wiring, plumbing and structure of your house is safe before starting any surface-level improvements.
The north-east and north-west of England are great places to make a quick profit from affordable housing. Country Durham came in second after Burnley, followed by Rutland and Middlesbrough.
When researching different areas, make sure to explore local schools, shops, transport links, and potential planning issues. Speak to local people to find houses that might not be on the market just yet.
