If you want to buy properties to flip, (in other words to buy and then sell on), how would you go about finding these types of properties? Over the past few weeks we’ve been looking at buy to lets and HMOs, and came to the conclusion that the best place to find these types of properties is at an estate agents – AND the same applies to flip properties.
But, would you go into an estate agents and specifically ask for properties to flip? The answer is no, probably not. Instead, what you should ask is for properties that require some form of work.
Just to remind you, when it comes to flips there are a couple of different approaches that you can take. You could flip to other investors or you could flip to owner occupiers – and the best way of doing a “flip” is to find a property whereby you could add value by refurbishing. With this in mind, speaking with agents and asking for properties which need doing up would be a great way to get the ball rolling.
Another question to ask an agent is this: “Do you have any properties on your books that are empty at the moment?” There’s no rhyme or reason why this tends to be the case, but often, properties that are empty are those that require work. For whatever reason, sometimes people leave properties in a hurry and don’t have the time to fix them up or to make them shiny and new. So, it’s certainly worthwhile asking if your agent has any properties which are empty.
This leads me to another important aspect of flipping. One of the reasons why properties or particular properties can be good for flipping is because you can buy them at the right price. As I explained in a previous blog post, this usually comes down to the motivation of a seller. If a vendor has a need to sell a property quickly, then you might be able to buy a property cheaply and this will help you to create a better margin.
But, why would a vendor be willing to sell at a cheaper price? It all comes down to motivation. If a seller finds him or herself in distress – in other words, if they have a real need to get rid of a property, then “time” rather than “purchase price” may be the deciding factor.
By the way, when I say “distressed” I’m not suggesting that you take advantage of a seller but that you look for situations whereby a seller is highly motivated to sell because the purchase price is not their only priority. For example, a situation in which a seller regards quickly getting rid of their property far more important than the price that they achieve for it. In this manner, you buy the property quickly to help the seller resolve whatever issue they are experiencing and in return, you get the property for a decent price. It’s a win-win all round.
So, asking if an agent has got any properties which are empty is always a good move as it’s likely to suggest that a seller is going to be motivated.
What you also have to think is that an empty property is also a cost to someone. From council tax to utility bills, especially if it’s winter and the heating is on to stop burst pipes, an empty property still comes with costs. This alone can motivate a seller.
How about looking on Rightmove for properties to flip? The tool of choice for many professional investors, Rightmove can be great for browsing available properties. However, I wouldn’t advise that you solely rely on Rightmove. Whilst you can tell from the photos which properties are in disrepair, you have to remember that agents do their best to make each property look as good as possible. So, unless a property is in such a mess that it can’t be remedied with a bit of ‘Photoshop’, then it’s unlikely you’ll know from photos alone which properties might benefit from a refurb and be suitable for flipping.
Then there’s another problem with Rightmove. Many of the properties which we want to sell on, we’re going to buy because we can get them at a decent price – and this might not be because they need to be refurbished. It might be that they are being sold by a motivated seller and this is not something which we can ascertain from Rightmove.
For example, Rightmove can’t tell you if a vendor is having financial difficulties, nor that a vendor is going through a separation or divorce, nor that they are relocating and need to sell their property quickly. With all these scenarios, it’s likely that a vendor will accept a lower asking price.
Rightmove can’t give you an indication as to whether there’s a deal to be done or not. With this in mind, whilst Rightmove might be great for spotting one or two properties that need obvious work, I would still advocate visiting estate agents as they are more likely to know the motivation of a seller and expose you to opportunities that aren’t obvious with a cursory glance at the internet.
Peter Jones B.Sc FRICS
By the way, I’ve rewritten and updated my best selling eBook, The Successful Property Investor’s Strategy Workshop, which is an account of how I put together my multi-property portfolio, starting from scratch and with no money of my own, and how you can do the same. For more details please go to ThePropertyTeacher.co.uk