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Is house flipping a profitable venture in 2021?

Updated: Jun 21, 2021

The statement, there will never be another year like 2020, cannot be any truer at this point in history. It was a year of unprecedented developments that had businesses, investors, and consumers unequipped to deal with the dilemma. The pandemic is certainly an ongoing crisis that the world is still clambering to get a grip on.

The UK was just settling in and transition to a new normal 'post-Covid’ before the rug got lifted again and Brexit comes into full effect. London property market was hard hit, and the economy is rattling at its core.

This leads to the questions.

How should investors be reacting to these changes and which asset classes are set for impressive performances in the times ahead?

Investment advisors remain divided, but what we are really interested in is how the British real estate market and property investment will perform. Will house flipping be profitable and should you invest in buy-to-let property? Could buying and selling be a good idea if property prices and sales value are questionable?

Property reports show progress in estate sales prices.

  • In November 2020, the average price of residential property in the UK experienced its highest level of growth since 2015.

  • This growth signified the end of the previous four-year property stagnation.

  • Annual house price growth rebounded to 6.9% from 6.4% in January 2020.

  • Prices were up 0.7% month-on-month, erasing the small decline seen in January.

Will the housing market in Britain be able to keep this momentum? Would another year of gains be on the cards for investors and their investment property?

Paresh Raja, founder, and CEO of bridging loan provider Market Financial Solutions (MFS) says that he is confident that 2021 may even surpass 2020 in positive property sector growth as soon as the current lockdown passes. The high levels of activity should continue this year, further increasing the average price of UK property.

He also states that he cannot imagine that any negative repercussions can come from the UK's EU departure. Investment into British real estate cannot by any measurable extent be affected, at least not in the short to medium term. The mass loss of population in London was concentrated at the beginning of the pandemic rather than following the Brexit finalization. It was predicted that house prices will grow by 4% over the coming 12 months. Lockdown is the motivating factor for prospective buyers, having spent the majority of last year at home, UK homeowners will be desperate to move to larger spaces. If it becomes a trend, it will easily offset any negative market developments.

Tips on house flipping for maximum profits.

When you buy a house - often at a property auction or in a distressed sale - then resell it for profit it is called house flipping. Flipping property is a very lucrative investment opportunity and can be gratifying. Knowing the ropes when finding a property can avoid potential pitfalls. Two main factors to consider with house flipping:

  • Location

An exhausted house in a good neighbourhood that is up and coming is easier to resell than a good house in the worst suburb. The house can be upgraded, but it is almost impossible to improve the character and safety of a neighbourhood.

Regard properties that are situated nearby schools, transport, and shops. Pay attention to areas with rising property prices, employment growth, and other indicators that it is thriving. If an area has an unusually high number of sales, it might indicate an underlying flat economy.

  • Price

When you are buying a property, before putting in an offer to purchase, estimate the price at which you could sell. The standard formula for a profitable flip is to pay no more than 70% of the value after renovations, minus the cost of the project. If you buy a repossessed property, you might have a higher return as repossessed houses are often sold way below the valuation report amounts.

Other elements to consider are:

  • Sound Structure

  • Renovations

  • Check your credit score.

  • Stick to your budget

Apart from flipping houses, here are other real estate investment opportunities that are gainful.

  • Development

If you can procure development finance. Property development and Land development can produce a considerably profitable return.

  • Student property investment

Buy-to-let student property can afford a proper rental yield. Student houses are consistently occupied given the right location.

  • Buy-to-let property.

Buy-to-let mortgages if managed well will churn out a foreseeable monthly rental income. The lender will require a mortgage valuation, which will offer peace of mind that you are getting value for money.

As with most things, make use of a professional in the field. 87 Properties Services is a Croydon-based, London property market expert.

Our experienced personal can draw upon their extensive knowledge and market intelligence to deliver the best deals for our clients.

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