Flipping allows you to earn up to 60% of the apartment purchase price
[ad_1]
Reselling undervalued apartments after renovation can bring up to 60% profitability. The main thing is to choose an apartment suitable for redevelopment and take into account the formats in demand among buyers, experts say.
Flippers are people or companies who purchase real estate for the purpose of quick resale and profit. They are looking for apartments or apartments with the potential to increase in value after making improvements, such as renovations or renovations. And after investing in improvements, they sell the property at a higher price, making a profit from the difference between the purchase and sale prices.
Flippers typically operate in the real estate market, where prices fluctuate and may be inflated due to demand or speculation. This phenomenon is relevant in a “live” market, when transactions take place quickly. Now is a difficult time for flippers: the market has dropped, they need to act even faster.
Popular formats
“If we compare the number of calls with requests to buy city real estate on the secondary market, then in February 2024 demand dropped by almost a quarter compared to February 2023. We can assume that by the end of March, demand will be approximately 20% lower than the same period last year,” predicts the chief analyst of Miel Group, Ekaterina Berezhnova.
The average price of a one-room apartment in February sales was 9.3 million rubles, a two-room apartment was 14.9 million rubles, and a three-room apartment was 20.8 million rubles. As before, in the structure of sales by apartment typology, the first place is occupied by two-room apartments – 41% of transactions, followed by one-room apartments – 29% of transactions, three-room apartments accounted for 24% of transactions. The share of multi-room apartments and rooms in the aggregate during the year did not exceed 10%.
In the current market, buying, renovating and selling homes is not easy. “At the same time, flippers are free to choose objects. They are not as rigidly tied to location, area and other characteristics as ordinary buyers. Therefore, already at the purchasing stage, they can provide themselves with a certain margin of cost,” explains investment interior designer Irina Valdayskaya.
The main thing is speed
Successful flipping isn’t just about buying the right item. The main difference between flippers and property buyers for themselves is that they evaluate any property in terms of profitability. And speed is a key advantage of a successful flipper.
Profitability depends primarily on how quickly the property is sold. To achieve high performance, it is important to competently build the logistics of the entire project. “In this logistics there must be other performers and a designer who provides all the creative and investment components of the project. He predicts the cost of implementing the idea and provides the flipper with tools to control the progress of the repair. This seriously reduces the project implementation time,” comments Irina Valdayskaya.
In addition, the designer helps to set the property apart from competitors through modern and up-to-date interior solutions, meeting the budget and deadlines specified by the flipper. “This provides an additional tool for increasing the cost of the apartment, which is the original goal of the flipper,” sums up Ms. Valdayskaya.
Flipping profitability
The flipping project cycle is about six to seven months. “Two to four months to select a property, one month to repair and another three to sell,” says Oksana Goreva, who makes money by reselling real estate. In order to speed up the sale of the property and meet the economics of the entire flipping project, now sellers of renovated apartments have to offer buyers a discount of up to 5%. According to Ms. Goreva, this helps speed up the deal, the deadline for which has now tripled. “If earlier an apartment could be sold in a month, now it takes at least three,” she notes. But even with such terms, the profitability of flipping sales can reach up to 60% per annum.
What is flipping based on? Buyers love ready-made solutions and are willing to pay for comfort and time saved on arrangement. Therefore, renovations to an apartment purchased by a flipper are the most important part of the project. Modern solutions – from colors to spatial designs – can increase the cost of housing, the main thing is to get into the mood of the client. Experienced flippers recommend avoiding too original interior solutions. Sticking to the base is the best option: neutral light colors and rare color accents in combination with modern technology will be the best option.
As for choosing an apartment, you should take into account the basic characteristics of the property and the fact that it should appeal to the maximum number of people.
This means that good transport accessibility and high-quality household and social infrastructure in the area of location are needed. “You also need to be careful about what you cannot change. For example, the quality of the entrance. It can be repaired, but this is usually very expensive and reduces the profitability of the project. If you have the opportunity to choose an apartment in a building with a clean entrance, it is better to pay attention to it,” adds Mrs. Goreva.
An additional advantage of the property for subsequent resale will also be the possibility of redevelopment. Therefore, panel or block houses are not suitable – flippers choose brick houses, where there are fewer load-bearing walls and it is easier to coordinate transformations.
Finally, it is important to remember that only an apartment with clean, transparent documents will be sold at the best price. “You can buy an apartment cheaply for renovation, but if it has a bad history or is not properly decorated, it will not be possible to sell it,” warns Ms. Goreva.
[ad_2]
Source link