Estate Agents (Part 7)
Having explored buy to lets and HMOs, this week we’re going to look at how to find properties to flip. In other words, properties that we can buy and then sell on. So, how do we do this? Do we literally just walk straight into an estate agent’s office and say, “I’m looking for properties to flip?”.
In my opinion, this isn’t a great approach; instead, what you could do is head to the agents in your investment area and say that you’re looking for properties which you can do up.
Just to recap, within the strategy of flips there are a couple of sub-strategies. You could be flipping to other investors or you could be flipping to owner occupiers, and the best way of doing a flip and adding value is to find a property that needs refurbishment work.
As such, if you go into an estate agents and specifically ask for properties which need work doing to them, then this is probably going to be a good place to start.
Another great question to always ask the estate agents is this: “Do you have any properties that are empty at the moment?”. It tends to be the case that properties which are empty often need work doing to them – and so by asking this question, you can uncover opportunities. I’m not sure why this is as it’s perfectly feasible for a property that’s vacant to be in good order, but this just happens to be the way of things. Perhaps those that have moved out have done so in a hurry, or perhaps they have been under some form of distress and haven’t had the time to necessarily fix the property up, but quite often the two scenarios of refurbs and vacant properties go hand-in-hand. So, it’s certainly worthwhile questioning if an agent has any properties on their books that are empty.
From a flipping point of view, this a great thing to ask anyway because one of the reasons why properties or particular properties can be good for flipping is because you can buy them at the right price. Now, flipping is not just all about doing a property up – although this can be a good way of adding value, which can help you to create the margin – as the other part of the equation is to buy the property cheaply.
If we remember from a few weeks back, very often it’s likely that we’re going to be buying a property cheaply because the seller needs to sell quickly, and this is typically down to the seller being somewhat distressed or motivated.
Please note that when I say “distressed” I’m not suggesting that we take advantage of people. Instead, what I’m advising is that you look for situations whereby a seller is highly motivated to sell because the purchase price is not their only priority. For example, a situation in which a seller regards quickly getting rid of their property far more important than the price that they achieve for it. In this manner, you buy the property quickly to help the seller resolve whatever issue they are experiencing in return for a decent price, and it’s ‘quid pro quo’.
With this in mind, it’s always worth asking if an agent has got any properties which are empty as this very often reflects that a vendor is going to be motivated.
You also have to remember that an empty property is usually a cost to somebody. There might be costs to maintain the property or there might be council tax or utility bills to pay. If it’s winter, the heating might be left on to avoid burst pipes, for example, and all these bills add up. So, do ask if a property is empty as this can result in a vendor being highly motivated.
What else can you do to find properties to flip – what about looking on Rightmove?
Rightmove is the tool of choice for many property investors and property professionals, and at a very basic level, yes, you could find properties to flip on Rightmove. You could go through the properties that are available in your investment area and could browse the photos for a clue as to whether a property needs to be refurbished.
However, the reality is that a good agent takes the very best pictures possible of a property to show it in its very best possible light. This means that it’s not always possible to spot a good refurb project unless a property is in such a dire state that it’s self-evident. As such, you have to realise that there will be plenty of properties out there that could actually do with a refurb (and which could be suitable for flipping) and by just looking on Rightmove, you might miss them.
Then there’s another problem with Rightmove. A lot of the properties which we want to sell on, we’re going to buy because we can get them at a decent price – and this might NOT be because they need to be refurbished.
Whilst it would be great if they did need to be refurbished, you have to remember that instrumental in getting them at a decent price will be the motivation of the vendor – and this is something that Rightmove won’t tell you.
For example, the vendor may be experiencing financial difficulties. They may run a business which might be in trouble, and by selling the property it would mean that they could quickly raise some funds. Or, it may be that the vendor is a couple which is going through a divorce or separation. Or, perhaps the vendor is relocating.
There are 101 different possible reasons why a vendor may want to act quickly but unfortunately, by glancing through a few photos on Rightmove, there will be no indication as to whether there’s a deal to be done or not. You just won’t know the extent of a seller’s motivation.
It’s for this reason that when people tell me that they’re looking for flips using Rightmove, I think to myself that it’s unlikely they’ll find many deals – one or two perhaps, purely because it’s obvious from the photos that a property needs refurbishing, but most of our refurbs are probably not going to be that simple. The motivation of a vendor is key to finding decent properties to buy and sell on.
Here’s to successful property investing.
Peter Jones
Peter Jones B.Sc FRICS
Chartered Surveyor, author and property investor
thepropertyteacher.co.uk
By the way, I’ve rewritten and updated my best-selling e-book, The Successful Property Investor’s Strategy Workshop, which is an account of how I put together my multi-property portfolio, starting from scratch and with no money of my own, and how you can do the same. For more details please go to: thepropertyteacher.co.uk/the-successful-property-investors-strategy-workshop.
