Property flipping is both an exciting and rewarding property strategy.
There are many advantages to renovating properties. Namely, if the project is carried out to a good standard, it has the potential to generate an huge uplift in the property value.
What are the stages of a property renovation? This blog post explains how to remodel a house for maximum returns.
What are the basics on how to remodel a house?
When buying a house, often work needs to be done to get the property up to a certain standard.
Although no remodelling project is the same, there are certain tasks that are common on all projects. These include:
- Find a project
- Access the project’s potential
- Make a thorough budgeting plan
- Carry out surveys
- Take out renovation insurance
- Check whether you are eligible for any grants
- Find an architect
- Apply for planning permission
- Find a builder
- Notify building control
- Organise waste removal
- Address access issues and assess existing drains
- Look at measures to improve energy efficiency
- Get the building weathertight
- Update plumbing and electrics
- Make internal structural changes
- First fix works
- Second fix jobs
- External jobs
- Decoration and snagging list
How to remodel: assessing the property
The first step in property flipping is deciding what you want to do. This could be with your existing property or start with finding a new purchase.
Properties in need of renovation are always in high demand and uncommon for people to end up paying more for a house than it is worth in order to beat the competition.
Cash-buyers can often be more successful than those relying on a regular mortgage or renovation mortgage. This is because getting a mortgage on the property depends on getting an independent valuation to ensure the house is worth as much as the accepted offer.
Despite properties selling fast, it is vital that checks are made to ensure everything is uncovered that could swallow up any budget.
Fortunately, you don’t have to buy blind, and can take a good look at any property.
Properties in need of renovation are often sold at auction or using a sealed bid system of best and final offers. By getting to know these systems early on, helps you to stand a better chance of securing a renovation property at a great price.
How to remodel: the property flipping checklist
It is important when assessing a home for a flip, that its potential is understood. This is where a renovation checklist comes in handy.
When viewing the house, ask the following questions:
- Is there a space to extend? Whether that is a rear or side extension, or converting a loft, basement or garage.
- Have neighbouring houses been successful at getting planning permission for renovations similar to yours?
- Is the house in the right location?
- How much of the work will be structural versus decorative?
- What are the ceiling prices for houses in the area? Will the renovations add enough value to the property?
- Are there any planning restrictions that could prevent the planned altercations?
- Ask other professionals to look at the property and give their opinion.
How to remodel: producing the budgeting plan
This is a really important stage when doing a property flip on a budget.
There are some additional fees that need to be factored in, such as:
- Reconnection fees (if water and gas supply has been disconnected)
- Valuation fees
- Council tax
- Professional fees (planning permission, buildings regulation approval, surveys, structural engineers reports etc)
- Contingency fees
- Legal costs
How to remodel: which surveys do you need?
A building survey will ensure any potential issues are flagged up early. It will highlight any areas of concern and give you an idea of any essential repairs that will be needed and what they might cost. The report can be used to make a decision on whether to proceed with the transaction, or whether the price can be negotiated.
A chartered survey will recommend further investigations if they suspect or detect:
- Subsidence or heave
- Drainage problems
Most structural issues have a solution. While these may increase your budget, finding them early on will allow you to plan better than this.
How to remodel: what insurance do you need?
Once contracts are exchanged on a renovation project, you become responsible for the site. Renovation insurance covers your property while building work is taking place.
When using a mortgage to fund the project, a lender may not release any money without any warranty and proof of insurance in place.
When renovating a house, insurance should include public and employer’s liability, cover for building materials and works, plant, tools, temporary buildings, the existing structure, personal accident and legal expenses.
How to remodel: do you need a house warranty?
House warrants a not always a requirement when renovating a house.
A warranty is basically a policy that will cover the house against flaws in the design, materials or build quality. It will also cover any problems that occur as a result of defects.
How to remodel: do you qualify for a grant?
It is important to check whether you are eligible for any grants that may apply for the renovation.
This can be done via using local councils and central government resources.
How to remodel: where can you find an architect?
Once the structural condition has been assessed, the next task is to design the new home.
It is not always necessary to hire an architect or designer and you may have some great renovation ideas of your own. Plus, it will save you money if you use your own design.
A professional designer will be able to talk you through the planning permission process, produce designs based on your brief, advise on what will or won’t be viewed favourably by local planners, and they will be able to give you an idea of how far your budget will stretch.
Once you have a design that you are happy with and which has been approved, you should create a schedule of works to ensure that you are carrying out improvements in a logical way to minimise disruption and duplication.
How to remodel: how can you secure planning permission?
Some house renovations require planning permission, but there are several consent checks to bear in mind before starting work on your house.
- Planning permission
- Building Regulations approval
- Listed building consent
To avoid delays, begin your schedule of works with those projects that do not require planning consent.
If you are extending or altering the roofline, you may need planning permission. If you live in a listed property or designated area, you will almost certainly require consent before carrying out any work. You should check with the local planning department before starting work.
Jobs that require Building Regulations approval can be started following 24 hours’ notice of intention to comply, made to the local authority building control department.
How to remodel: how can you find a builder?
You may find, if you are using an architect, that they can recommend builders to you. Otherwise you need to find a builder to do the renovation work, unless you plan on doing all the work on a DIY basis.
How to remodel: how do you decide on a schedule?
The renovation project should start only when you have a schedule of work. This will ensure that the project is kept on track. A concise and clear schedule will list every single job when renovating a house and placed in the correct order. Ideally, it will include how long it will take and how much it will cost.
The schedule will vary depending on the project, but could include:
- Current condition assessment
- Stop further decay
- Grants and tax concessions
- Statutory consents
- Structural stability
- Demolition work
- Dealing with damp
- Site access
- Major building work
- External works
- Fast fix
- Drying out
- Fixed flooring
- Second fix
- Final clean
- Move in
You can then proceed with the flip.
What are the benefits of flipping houses?
Property flipping carries many benefits:
Potential to make a good profit: For companies and individuals that do this full-time, property flipping can be lucrative business. It has the ability to make significant returns of investment and this can be achieved relatively quickly.
Personal development: There is a lot of valuable experience to be gained from flipping a house. Purchasing homes and materials can increase your negotiation skills. Other skills include the ability to delegate tasks, time management, holding people accountable, as well as widening construction and real estate.
Renovating homes is rewarding: If you’re only interested in flipping houses for the money, you will quickly learn that there are other rewards. When you renovate and sell an old home, you give it a new ‘lease of life’. You’re taking an eyesore and creating a new family home where memories will be made. You may also be improving the quality of life on the street where the property is based.
Abi Hookway’s book – ‘Flip or Flop: An Ultimate Guide To Property Flipping’ is out in November 2022.
To find out more about property flipping, enjoy this free webinar: The Ultimate Guide For Flipping Property For Profit in 2022.
For more information call us on 01302 897131 or email email@example.com.