At first glance, property flipping may seem like an incredibly easy way to make some decent money: buy an ugly or dilapidated old property, fix it up in a few weeks and then sell it on for a tidy profit. Of course, in reality the process isn’t that simple. If it was, a lot more people would considering it as a bankable business start-up. Having said that, property flipping can still reap serious financial rewards, providing of course that you follow the golden rules.
If you’re thinking of taking a loan in order to kick-start your house flipping business, then think again. The main issue with loans is that they are a fixed obligation that you have no alternative but to meet. Naturally, this could have serious financial implications if one of your investments doesn’t pay off as quickly as you hope. As well as this, loans cost money and take time. If, for example, you were planning on flipping three houses over the next 18 months and needed an extra £60,000 for each deal, it could take a month or more to finalize each loan, and would probably cost you an extra £5,000 or more. And whilst you’re waiting for your loan to be approved, dozens of buyers – with cash in hand – may already have swooped in on the properties you were eyeing up.