Flipping house or real estate flipping is the new trendy real estate investment method. In Spain, more and more people are opting for this method, mainly due to its rapid return.
But what is the Flipping House really?
In Spain, this “Flip the house” is a very profitable method, especially in homes that are located in towns near large cities.
This term is used in economics to describe a purchase of something that is quickly resold for profit, regardless of the type of asset it refers to. The flipping method is becoming fashionable because of how simple it is.
If we go to its essence, we can summarize the process in just three simple steps:
1- Buy cheaply (or, in the best case, inherit)
2- Renovate to increase value
3- Sell for a higher price to make the investment profitable
How does the Flipping House work with high-end homes?
Indeed, the high-end Flipping House also exists.
Although the most common thing within the Flipping House is to look for homes in working-class areas, there is a certain group of investors who prefer to go to higher-cost homes located in better-valued areas, for example, because of the different tourist attractions around them or simply because of the beauty and/or services of the surroundings of the house.
If you are that type of investor and you are thinking of buying a home in a strategic area of the city, either to make it profitable with tourist rental or to do Flipping House, you should know that it is key that you carry out a renovation that allows that home to go to the “next level” and stand out for its exclusivity among the homes in the area.
In other words, the low- or mid-range Flipping House focuses on turning a home in poor condition or “neglected” into a “livable and desirable” home for most people. On the other hand, the high-end Flipping House focuses on converting well-located and, a priori, already habitable homes into exclusive homes. The latter requires greater investment but at the same time, thanks to its location, it has greater advantages that we will see later.
What are the keys to the Flipping House?
To achieve these high-end homes, obviously, it is very important to study the renovation well with a professional and take care of every last detail.
The purchase: The key is to buy low and sell high, as easy as that, which implies that one of the fundamental characteristics is to buy below the market price. Remember that cheap does not always imply low cost. A house in the town hall square of Valencia for €150,000 is cheap, although a priori the cost is not so low.
Homes that are sold below their market price are mainly those that are in poor condition, those that need a facelift or those that the owner (sometimes banks) needs to get rid of their property urgently.
The reform: In the case of the low- or mid-range flipping house, what is most interesting about the method is to invest as little as possible in the renovation, although this is often not possible and a comprehensive renovation is needed.
In the case of the high-end Flipping House, it is not so critical to invest as little as possible in the renovation, as long as this renovation multiplies the value of the house later.
Another of the most important keys to make it work is to know how to sell well, to make the house look good in photographs and in reality. You can’t post a photo that is poorly lit, not in focus, or highlights flaws in it. Likewise, the small details that turn homes into homes will be the ones that will make your buyer opt for your home or not. Keep them in mind in the reform.
Location: It is important to prioritize the location of the property, that it is close to schools, supermarkets, etc. and/or attractive places touristically speaking.
The new fashion
The Flipping House, as you can see, is a “simple” business that consists of looking for homes at a good price, achieving a good renovation and a good sale.
Like all businesses, it requires knowledge, planning, and good execution. Patience, common sense and experience, yours or that of the professionals you surround yourself with, are key in studying and choosing.
Advantages of the Flipping House in high-end homes.
- They are highly revaluable assets due to their location
- They tend to involve fewer problems with the neighborhood and/or problems related to less reputable neighborhoods.
- They can be profitable as tourist rentals
- A good renovation can make you sell the house for more than 6 figures.
Disadvantages of the Flipping House.
- There is a financial risk
- Delays in the renovation, which causes delays in the return on investment.
- Buying homes is a complex investment due to the many costs involved in buying and maintaining them.
- Problems derived from a bad analysis in the purchase.
- You may run a high risk as an investor since many of these homes are sold at auction and you do not have the possibility of seeing them before buying them, generating additional costs.
Tips for Flipping House in High-End Homes
1- Study the market, the location and its trends
Don’t just take into account the economic part, but also the trends of the neighborhoods, the new projects that are going to be created in the area or city, etc.
2- Analyze key aspects of the property
Before investing in the purchase of a property, you should analyze its key aspects, the location, whether the structure is solid or has invisible problems that are not seen. You must know well what you are investing in.
3- Limit risk, rely on professionals in buying and selling and renovations
Make sure you don’t miss anything and know how much it will cost you to renovate it and calculate the ideal purchase price. As we have highlighted before, it is important that it is below the market price.
4- Make cost-effective remodels
Whenever you do the renovation, do it thinking about the value it will add to the home, either to make it simply habitable or to make it exclusive.
CAN WE HELP YOU?
If you are thinking of starting with the high-end Flipping House and would like to understand how much it would cost you to carry out a renovation that makes your home exclusive, we leave you our renovation planner here.
At Kaleidoscope we only work with high-end homes, so we will be happy to give you ideas to turn your next investment into the most exclusive house in the area and thus be able to sell it soon.
