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)

3 Tips for Maximizing Your Home’s Selling Potential

I have a confession to make… I’m a serial house mover. I know it’s an addiction, but as soon as I’ve finished one house renovation, I’m eager to move onto the next. In fact my mum always jokes that as soon as the windows needs cleaning I’m looking for the next house! And this house is no exception. We recently started looking for a property to buy with a little more land, so that maybe, just maybe, I can have my horse on my own property one day and fulfill a lifelong dream.

Through my 14 years of home ownership I’ve bought and sold 7 homes. That’s one new home every two years on average. Some have been for job moves, but most have been because I finished a renovation and wanted to move onto the next project.

Staged master bedroom
Master bedroom staged for sale in our last house

In that time, I’ve learnt a thing or two about how to present your house for sale, the do’s and don’ts. In this post I wanted to share with you some of my learnings.

1. Small details count

I was reminded on a recent house viewing with a Realtor friend of ours, that the small details really can make a big difference. I’ve learnt this over the years, and especially from my perfectionist husband. Another confession, I have no patience. So for me ‘good enough’, was always good enough. But actually it isn’t, and can knock the sale-ability of your house.

Examples of this might be:

  • Gaps between the skirting / base board and wall
  • Nail holes in trim that haven’t been filled
  • Messy paint edges
  • Holes or dents in walls
  • Loose fitting trim etc

These small details may not be immediately recognizable to the prospective buyer, but the overall culmination of them can lead to a shoddy appearance overall.

A house we recently looked at had a lot of these examples, and the price the owners were asking was top dollar. All these poorly finished jobs said to us that this house wasn’t worth the money they were asking. It also made us think, if they’ve left these visible jobs so sloppy, then what else have they cut corners on which we can’t see? Your mind immediately goes to more expensive things like ‘Have they maintained the water heater?’, ‘Have they maintained the septic tank?’ etc. Every one of these is a bargaining point for a buyer, or put simply, a reason to knock the value of your home.

Every one of these is a bargaining point for a buyer, or put simply, a reason to knock the value of your home.

And these things are so easy to fix. They’re not complicated or expensive, they just require a bit of time and effort. Even the most inexperienced DIY’er can fill a nail hole with some wood filler!

2. Clutter!

As the legend Ann Maurice of the U.K. TV series House Doctor once said ‘de-clutter’! Again a simple and inexpensive thing to do, yet so many home owners won’t do this before selling their homes.

Tidy kitchen staged for sale
Tidy kitchen staged for sale in one of our previous houses

Another house we recently viewed suffered from this problem. Even in the online listing there were a pair of jeans strewn over a chair in the bedroom next to the unmade bed. Having so much clutter and untidiness in a room makes it hard for a buyer to look past it and see the true potential and space of a room. And not to mention it again looks sloppy, and triggers those same doubts about maintenance and upkeep of the property overall.

Having so much clutter and untidiness in a room makes it hard for a buyer to look past it and see the true potential and space of a room.

If you are selling your house, spend some time before listing to de-clutter. I don’t mean strip every last thing out of your house, but leave just enough to make it feel lived in, and store the rest in boxes, or donate it to charity if you don’t need it anymore. Not only will it make your rooms look bigger, but you’ll also have less to pack when you do sell. Win win!

3. Stage it

You may not feel this is necessary, and it can be a bit of an expense. But if your house is vacant, it can actually be harder for people to imagine where to place furniture and how to use the space.

Even for people who are good at visualizing things, it can be a challenge. For me, I usually refer to floor plans and sketch out where our furniture would fit. But this takes a lot of time and effort. And in the U.S. is even more difficult as listings don’t usually come with floor plans as they do in U.K. listings. Stage the rooms to make it easy for your buyers to imagine themselves living in your home, and help them understand how they’ll use each room.

Stage the rooms to make it easy for your buyers to imagine themselves living in your home, and help them understand how they’ll use each room.

We did this in our previous house in the U.K. We had a 4 bedroom home, and we were using one of the bedrooms as a study. Being that space is at a premium in the U.K. every bedroom counts and can add a lot to the value of your house. So don’t waste it. We also knew that our target audience for potential buyers would be a family, given the location and type of house we had. So before we listed our house for sale, we converted it back into a bedroom.

We bought an inexpensive bed, some bedding and bedside table and staged it as a bedroom so prospective buyers could imagine the house as a four bedroom house suitable for their family. It cost us a few hundred Pounds at most, and an afternoon’s work.

In summary here are my tips for showing your house to its best potential and maximizing its value. They are things I’ve either done myself, or have seen from other sellers:

Easy / low cost:

  • Tidy up! This is non-negotiable. No dirty dishes on the work surfaces, have clean fluffy towels in the bathrooms, no piles of boots by the front door… Make your home look like a show home, because that’s probably what you’re competing against.
  • Don’t forget the outside! Make sure the lawn is mowed, weeds are gone and no children’s toys or gardening equipment lying around.
  • Hide any pet paraphernalia – Take the dog for a walk, put their beds and toys in your car or garage whilst showing your house.
  • Finish all those unfinished jobs – Fill all those nail holes, makes sure your paint lines are straight, fix that broken step etc.
  • Light some scented candles before a showing (although never leave an open flame unattended) to fill the rooms with a pleasant fragrance, or use a room fragrance. Even better, bake some cookies. It may sounds a little cliché but it works. As a bonus your viewers have an enjoyable snack as they view your house.
  • A great little ‘wow’ I’ve seen when viewing a house, were notes in each room left by the home owner to explain some of the history / story behind the room. In the U.S. the home owner is generally not present for the showing, so the buyer doesn’t get any of the back-story about the house, and how it’s been loved by the current owners. These stories help to create a sense of ‘home’, and show how well cared for the home is.

Little bit of investment in time and / or money:

  • Show empty rooms with the appropriate furniture in them – Put a bed in a bedroom, or give that multi-function room a purpose.
  • If your cabinetry is looking a little dated (I’m thinking glossy red oak or golden pine), then paint it. It may take a little bit of time and effort, but the results can be amazing.
  • The same is true for brickwork or other decorative wall finishes. If it looks dated, paint it.
  • If you have flooring that’s outdated or tired, think about replacing it now. You can get some affordable flooring options that are easy for a DIY’er to install, such as click-lock laminates or engineered hardwoods. These can cost as little as $1.50 per sqft from end-of-line and clearance retail outlets. Just make sure the quality of the flooring is appropriate for the value of the house, I.E. no $1 per sqft laminates in a $500,000 home. Back to my original point, make sure the fitting is done to a high standard and no corners are cut.
Floor fitting
My Father-in-Law and I fitting the floor in one of our previous houses

There are a million things you can do to your home to make it more sell-able and potentially add to the value of your home. Make sure you get professional advice from your Realtor or Estate Agent. Most issues can be easily fixed, they just require a bit of investment in time. Selling houses isn’t easy, and the more effort you put in, the greater the reward.

Selling houses isn’t easy, and the more effort you put in, the greater the reward.

I’d love to hear about what you’ve tried when selling your homes. Leave a comment below, and as always, if you enjoyed this post please sign-up below to follow this blog.

Until next time,