3 fundamental flipping lessons

I had my first taste of property investing straight after graduating university in 2004. I was working full time and couldn’t believe how incredible it was to make four figures in my spare time doing something that I loved. I was hooked! Since that first property, I’ve bought and sold a further 5 properties in the U.K. and bought one in the U.S.

The first flip

I bought my first “live in flip” in 2004 straight after graduating for literally 0% down. (A live in flip is a property that is your primary residence that you fix up and improve whilst living there with the intention of making profit.) 0% down is unheard of in today’s conventional mortgage market, but at the time house prices were rising so fast that banks were pretty much guaranteed a safe return on their investment.

It was a terraced house built in the 1800’s, a former farm workers cottage, with two bedrooms, an upstairs bathroom (rare in this age of house, most were downstairs), a dining room, living room and a kitchen extension at the back of the house. It overlooked farmland and had a good sized garden/yard. We paid £84,950 for it, which was a fair price given it needed some updating. Comps in the area fixed up we’re around £90,000-100,000.

Having no budget means you need to be resourceful

We had pretty much £0 for the renovation. We were fresh out of university with student loan debt, and I was struggling to find a permanent job. So we did the project slowly, learned a lot of the skills ourselves, and roped in family members to help where we could. It taught me to be resourceful and to renovate on a tight budget. Skills that I still use today no matter how big my budget.

Every penny spent is a penny off the profit

Not only that though, but I always treated our live in flip as a business. Every penny I spent meant a penny less in profit. So any way I could cut cost I did. Whether that was doing the work ourselves or bargain hunting for cheaper products.

We probably invested about £3000 into the renovation and eventually sold it two years later for around £98,000. After fees we probably made about £7000 in profit. Not ground breaking by any means, but to get anything back for doing something I enjoyed doing was incredible!

Now I’ve learnt over the years that whilst this is true, I’ve also learned that sometimes if you invest more into the renovations you can expect to get more back. You need to understand what improvements they are by what your target audience values. Which brings me on to my next point.

Understand your potential buyer

House flipping uses some fundamental marketing techniques – understanding who your target audience is, and tailoring your product to their needs / wants. I.e. Understand who may potentially buy your house, learn about them and tailor your renovation to their needs.

How do you do this? There are a number of ways.

1. You can look at online reports of the demographics in your area. Such as ons.gov.uk in the U.K. and usa.gov in the U.S. This will give you a general overview of the types of people likely to buy in your area. For further links in the US, read this helpful blog post by Realtor.com. Or for the UK, this article by smartpostcode.co.uk lists 25 websites for further info.

2. Another way is to assess the type of home. Ours was a small entry level house, so we could assume it would probably suit a couple on their own or with one kid, as it was a little too small to be a family home for multiple people.

3. You can also assess it based on the location. Is it near to shops? A particular business? Is it in a student area? Does the area have fashionable shops and cafes near it? Who do you see walking around the neighborhood?

4. Also check out the nearby listings for clues. What do the houses look like near to it? What style of decor do they have? Industrial? Modern? Or more traditional? Does this appeal to older or younger buyers?

Once you have a good understanding of them find out what they like and what they value. You can gather lots of clues from doing a little bit of research. But also use the experts. Ask your estate agent/realtor about who typically buys these properties as they’ll have great insight. Also ask them what features a typical buyer values. This will help you to tailor your renovations to meet your customer’s needs and wants and produce a product that they want to buy. It will also help you maximize any profit. For example, there’s no point wasting extra money on installing quartz countertops if the potential buyers only expect laminate. However it depends on how competitive the market is and what your potential buyers value.

I think these 3 lessons I learned from doing my first live in flip have stood me in good stead through today.

  1. Know your audience and produce a product they want to buy
  2. Treat every penny spent as potential lost profit
  3. Even if you have plentiful budget, watch every penny and be resourceful. Shop around and do the work yourself where it makes sense.

There’s a lot more to flipping houses than just these 3 lessons. I’ll explore more as I continue to learn new things and reflect on what I’ve learned over the years. I’d also love to hear from you what your important learnings have been. Leave a comment in the comments section.

Thanks for reading,

Jo (@britflipper)

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Five challenges you might encounter when starting out as an interior designer

So I took the plunge a few weeks ago – jumping in and starting my first real interior design job for some friends. It started when I posted on Facebook about finally getting my diploma in Interior Design and asking if anyone was brave enough to let me practice my new found skills on them. Low and behold someone stepped up!

A friend from our gym was wanting some help to refresh some rooms in their house and make it feel a little more coastal and pulled together. They had lived in Florida for a while and loved this style. They showed me pictures of room styles they liked and it was all very comfortable, light and bright. But this first project was not without its challenges.

1. Working with the existing.

Whilst their house had great bones being relatively new, and had a great amount of natural light. The challenge was the fact that their floors, kitchen cabinets and furniture were all dark. Most coastal styles have white or very pale wood furniture. Painting the cabinets white would be the obvious choice but understandably they weren’t keen on this when the kitchen was so new.

2. Making it child friendly.

This would be fine, except coastal is all about the pale fabrics. Not a good combination with black home-made slime projects! So I had a challenge to find hard wearing fabrics but still achieve the bright and fresh look.

3. The budget.

At first I thought I had a healthy budget for the three rooms they wanted redesigning. But it turns out that performance fabric sectionals are pretty expensive! I found the perfect linen loose cover style sectional for them from Pottery Barn until I realized I’d blown 70% of their overall budget on one piece of furniture! I learned a valuable lesson here, research the prices as well as the styles before proposing ideas to clients!

Sullivan Sectional, Pottery Barn

The other challenges I faced were more from a process standpoint rather than the design.

4. Underestimating the time it takes.

One thing that was a big learning experience for me is how long it takes to do these projects. Literally hours searching though websites to find the right products then putting it all into PowerPoint presentations with links to the actual products. I’m sure there must be better ways of doing this, and that’s something I need to find out from more seasoned Interior Designers.

5. Not having the right tools.

I also don’t have the right tools to do this job professionally, such as SketchUp, Revit or even Photoshop anymore. So I’m cutting pasting and cobbling together a design with PowerPoint and using free online 3D tools to try and visualize the design ideas as best I can. But it looks unprofessional in my opinion. So at some point I’m going to need to invest in the $1000’s to get the right tools and learn how to use them.

These are just a few of my initial learnings and challenges I’ve faced in starting out on my Interior Design side business. I definitely have a long way to go and am gaining a huge amount of knowledge and experience from helping out my friends. Keep reading my blog to find out how I work through these challenges to deliver a design they’ll love and streamline my processes.

Thanks for reading!

Jo