Flipping Property For A Quick Profit:
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Flipping property is only profitable in a rising market. Speed is the essence of the game. Unfortunately, flipping property now in the UK is difficult, because properties are so overvalued that it’s difficult to make any profit at all.
If you had bought property between 1995 and 2003, you’d have made a nice profit as the UK market was experiencing a property boom. At that time, the property market was growing at an average 15% per year, making flipping property an ideal option.
It’s very difficult to make a profit now in the UK, because property prices are increasing by only around 5% per year. The profit you can make will cover only your buying and selling costs.
For example, an average house in the UK is currently valued at around £175,000. The transaction costs for purchasing this property are around 2% of the purchase price. In other words, it will cost you £3,500 just to buy the place. When it’s time to sell, you will be liable for selling costs of another 2%, which include real estate agent fees and legal costs.
This means that if you plan to sell within a year, you'll need to make a profit of £7,000 just to offset the fees. You’ll also have to factor in repair costs for the home, which can be substantial, as well as all the time and labor you put into the process.
As you can see, you have to make a lot of money just to break even.
Remember, flipping property is similar to trading property. The problem with trading property is that it's not a liquid asset.
For example, if you're trading in stocks and shares and you need to sell, you can just pick up the phone or go online, and you’ll have the money in your bank account within minutes. That's liquidity. Try doing that with property,
Selling property can take, on average, from 6 to 9 months. During that time, you still have to pay the mortgage and all those irritating recurring bills: council taxes, service charges, and energy costs.
When you consider flipping property, think of it as a game of pass the parcel. You need to sell before the music stops playing. In other words, you need to sell while the market is rising. If the market stagnates you’re left with the parcel… In other words, you're stuffed.
So, you need to get in early and sell out early. Keep ahead of the market.
Regularly check the following market indicators:
- Affordability index compiled by Cheltenham and Gloucester Building Society
- Bank of England inflation reports
- Halifax House Price Index
- National Consumer Confidence Index
Another important indicator is the Bank of England’s decision in setting interest rates. If the bank starts increasing interest rates, you should get out of the market as quickly as possible.
In my opinion, now is not a good time to consider flipping property. I would advise using another strategy to make money.
Return from Flipping Property to Investment Property Strategy
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