House flipping in South Africa 2022: How to run this lucrative business
House flipping has been a rising trend in the real estate industry for years since the 1980s. It has proven to be one of the best ways to earn a decent living within a shorter time. The practice is common in the United Kingdom and the United States. House flipping in South Africa is also growing as netizens adopt the business.
Source: Getty Images
People often prefer making deals that eventually pay well, even though they might take time other than working till odd hours of the day to make money. How does one get into this business and run it effectively? Is house flipping still profitable?
Property Flipping
Flipping in business is simply buying an asset and quickly selling it before it depreciates further in value to make a profit. In the real estate sector, investors buy, rehabilitate and sell properties for profit, buying low and selling high. Investors or buyers take advantage of discounts offered on properties due to the conditions it is in or the owner's urgency to sell the property. It is common in the United States, which hit the record in 2017 for having the highest number of flipped condos.
How to flip houses for beginners
Flipping houses in South Africa is a lucrative business that can generate a lot of income if done right. It involves buying and selling houses at profitable rates. How do you flip a house for beginners? Here is a beginner’s guide.
1. Setting a budget
Set aside the money you want to invest and find a suitable financing company if you need financing. Setting a budget helps curb overspending or running low on money amid the project.
2. The location of the house
Location plays a significant part in the real estate industry, as different areas have different property rates. Relying on agents for tracking property listings in this can save a big deal, especially for a beginner. You should also consider proximity to essential services such as schools, shopping centres, and transport facilities.
3. Have a business plan
Knowing the critical details helps save a lot. A business plan is crucial to know if the investment will generate profits or not whenever you are ready to sell it again.
4. Establish a team to work with
Going solo on such projects is not advisable. Build a team to help propel you toward achieving your goal. Enquire about reputable personnel as far as building and construction are concerned before proceeding with the purchase. If you cannot manage the project yourself, hire a project manager to keep the project on track and ensure everything goes as planned.
5. Establish your business
If you plan to flip houses full-time, hire professionals to help steer your business forward. Having an attorney and an accountant is one of the bare minimums. They will help draw contracts and manage the company's financial aspects, from taxes to expenditures.
What is the 70% rule in house flipping?
Source: Getty Images
When scouring listings for investment opportunities, the 70% rule is essential to both experienced flippers and beginners. The rule states that investors should not purchase a property at a price above 70% of the property’s value after repair, commonly known as (ARV) minus the total cost of repairs needed to renovate the property.
Is flipping houses profitable in South Africa?
The business is very lucrative and profitable if done right. Balancing the aspects of buying low and selling high and following the 70% rule will ensure profitability. How much do most house flippers make? Profits vary according to properties, with all aspects considered; hence there is no flat rate to value the profits expected in this business.
Can flipping houses be a side job?
Yes. It is one of the best ways to earn extra income while working full-time. It provides an allowance to make money even if your full-time work is still demanding. When one finds it profitable, one can always opt to go for it full-time.
Is it better to flip or rent?
Flipping and renting houses are great ways to earn from real estate properties. Flipping houses guarantees an income when there is a return on investment after a successful sale, whereas renting guarantees regular income until the property is vacant.
For a beginner seeking to venture into house flipping in South Africa, it is vital to know all the dos and don'ts before deciding. Ensure you seek expert advice in addition to the above guide.
READ ALSO: Best recruitment agencies for overseas jobs in South Africa in 2023
Briefly.co.za published an article about the best recruitment agencies in South Africa to go for when seeking a job overseas.
Job seeking can be a nightmare sometimes. However, recruitment agencies aim to make the work easier by offering local and overseas-ready opportunities.
Source: Briefly News
