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If you're considering buying a property to do up and sell on at a profit, it's still crucial to make sure your due diligence is spot on.

Time to flip?

Detail is everything

Buying a property to do up and sell on at a profit, commonly known as a ‘flipping’, is becoming increasingly popular, but making that profit is not guaranteed. For flipping to be a success you still need to be as diligent as ever when it comes to those finer details, the key to making that profitable sale definitely lies in the planning.

A clear vision

One of our clients got in touch as they were keen to buy a property to renovate and sell, with the view to doing this with more properties in the future. They wanted us to help them source their first property and kickstart their plans.

Telescope and the view beyond
Having a clear vision of what you’re looking for makes things much easier

We met, and went through their strategy to make sure we had a clear understanding of their drivers and requirements, spending time on this is so important as the property market is vast. If you have some clear parameters and expectations to work towards it makes the sourcing process much more efficient.

After the initial meeting it was clear that the client was very experienced in property renovation and delivering a high-quality finish in their work. They just needed support to find the right property, at the right price and to prove the potential in the property that they could realise once their renovations were complete.

Getting it right

Properties are bought for many different reasons, but the one common denominator in any successful purchase is ensuring location is a key factor, and this was no less true on this occasion. Following the client’s brief, we were able to source a property in the right locality, where house prices were low enough, but demand was growing for finished properties, particularly within the school catchment area.

This particular property was for sale via the modern method of auction. At CPP we have a lot of experience in buying and selling properties, both in the more traditional way and through auction. Although auction purchasing is becoming more common, there are definitely some differences to be aware of, in particular the increased charges you will need to take into account.

We took the client through all of this and conducted thorough due diligence on their behalf, to understand the house price that would be achievable post renovations.

Exit sign
A fall-back ‘exit strategy’ is important, just incase things don’t work out

Once we knew this figure, we were able to work backwards and calculate the maximum bid position for our client, taking into account renovation costs, legal and selling fees, auction costs and the overall risk.

In addition, and as important as all the other aspects of due diligence, we created a clear exit strategy for our client. You should always have a fall-back option in place, for instance if the market crashed unexpectedly and your property couldn’t sell. In this case we made sure both properties also had strong rental potential and would bring in a sufficient return if the sale couldn’t be achieved for any reason.

One happy client later

The bidding process can be a pretty daunting experience, but we completed it on behalf of our client and were able to secure the property for £5,000 below our agreed maximum.

One happy client later, they were able to go ahead with their renovation plans and get the property ready to sell on. The best part, was that they received an offer above the asking price within just one week of going to market.

Our client made a twenty per cent return on the initial investment after all costs were taken into account and they were ready to carry on as they’d originally planned with their next property.  Once again, they asked for CPP’s support with sourcing the perfect place and I’m happy to say that the second project had the same level of success. This time round it was a standard purchase rather than auction but, after the renovations, the client went on to sell it and made around 20% profit.

If you’re contemplating getting into property renovations, or just want to find out more about how the process could work for you, then do get in touch and we can talk you through it.

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