How To Become A House Flipper In South Africa

The term “house flipping” is used by real estate investors to describe the process of buying, rehabbing, and selling properties for profit.

What experience do you need to flip a house?

What the stars of HGTV shows have in common are the ability to transform a home, including carpentry, design, tiling, landscape, and more. While the ability to do much of the work yourself is helpful, even the experienced hire contractors and get some help from electricians, plumbers, and the like.

Who should consider house flipping?

Flipping houses requires capital and investors looking to flip houses should have a hefty chunk of funds readily available. There are many upfront expenses that go into house flipping and getting loans to fund your project could be risky. Those who do not have the cash to invest should wait until they do.

Is house flipping a good investment?

The average profit from flipping a house is a 39.9% ROI. Sounds like a good investment, right? It can be but it requires you to have a lot of money to invest. And, things can go wrong.

If renovations uncover an issue beyond your budget, you could wind up in a hole. If the renovations you make don’t draw a buy, you can also pay taxes, interest, and other fees until it sells. It can be risky.

Where is house flipping most lucrative?

The best places to flip houses are where the real estate markets are performing at the nation’s highest levels. Realtor.com found the markets at press time to have a shortage of inventory, meaning homes are in high demand. Of the metro U.S. cities with the highest demand for housing.

Below is How To Become A House Flipper In South Africa

Steps to take before you purchase a house

If you’re ready to join the world of house flipping, there are steps you’ll need to take before you get your hands dirty in a project.

Get your real estate license or hire an agent

It is helpful to get your real estate license if you want to flip houses. Doing so means you’ll have first access to new listings and market trends, and you’ll save by not having to hire a real estate agent to handle your business.

Agents earn a commission of 5% to 6% of a house sale, which means that is 5% to 6% less than you’ll have in your pocket at the end of the flip.

Another benefit is all you will learn while earning your license, such as the ins and outs of zoning, Home Owners Associations (HOAs), home disclosures, and other things that can make you better at house flipping.

A standard real estate license varies by state. In Pennsylvania, for example, you’ll have to begin with courses to prepare you for the license test. These run between R 3778.27 to R 6045.24. The exam itself costs R 816.11, and then the initial license is R 1617.10 with another $10 toward a background check.

Once you become licensed, you will pay association fees as a realtor. This is between R 831.22 and R8690.03 for the local membership.

Hire a general contractor

Unless you’re already a contractor, you’ll need some help, no matter how handy you are. Hire someone with a license, experience, and a big network to bring in a team that can help you on a project.

Expect to pay between 10% to 20% of your total construction costs, including the materials, on a contractor. If you expect to make $50,000 in renovations, this means you will pay $5,000 to $10,000 for your contractor.

Set a budget

To be a successful house flipper, you should have plenty of cash at the ready to purchase a home outright rather than obtain a mortgage. A mortgage process slows you down and becomes risky because you will have to make payments until the property sells. Working within your own financial budget leaves you completely in charge.

You’ll need closing costs, realtor costs, legal fees, contractor and help costs, and the costs to refurbish the property, as well as a cushion in the event you discover unforeseen repairs that need to be tackled. For example, when tearing down a wall to create an open-concept space, you may discover asbestos, which means stopping the entire project to have it properly removed. It can be a very expensive surprise.

If you do need financing and choose to work with a lender, having great credit will help you secure the best interest rates. You will need the funds to pay the monthly payment during your project and until it sells and those monthly payments include interest.

Don’t forget you will also need to establish and pay for utilities, such as electric, gas, and water. Some home flippers elect to hire a decorator and rent furnishings to stage the house, which helps a home to sell faster but does require more funds.

Look at every avenue to determine how much home you can actually afford to buy and set a realistic goal for an after-reno sale price. The numbers in between are what you will earn, minus the costs involved in flipping.

Study trends

You will want to understand the market where you’ll be flipping your house, learning what properties have sold fast, and discovering the commonality. For example, if a neighborhood has created a market for families eager to enter a certain school district, flipping a house with a minimum of three bedrooms close to the school may lead to multiple interested buyers.

Are main level master bedrooms a hot commodity, or perhaps a home filled with hardwood flooring? Any detail you can hone in on can help you determine if a property is right for you and what you may have to do to a house in order to make it sell quickly is valuable intel.

If, when setting a budget, you realize the amount of money needed for a renovation exceeds the neighborhood’s comps, you will not make a profit and the home is not a good investment. Studying the trends will stop you from getting in over your head.

Do you need a license to be a house flipper In South Africa?

For people interested in house flipping in the state of California, one of the most common questions asked is “do I need a real estate license?” The simplest answer to this question is “no.” There is no law that requires you to obtain a California real estate license in order to flip houses.

How do I start a flipping business in South Africa?

Thinking of flipping a house?Here’s how to get started

Article summary.

Set a budget.

Location, location, location.

Develop a business plan.

Decorate for your target market.

Build an effective team.

Hire professionals.

How much does a house flipper make a year In South Africa?

ATTOM Data Solutions reported that home flipping slowed during the second quarter of , but the average flip netted the seller a gross profit of R 1026209.59, a return of 41.3%.

How much money do I need to start flipping houses In South Africa?

In the world of private money lending, the minimum amount of cash you need to flip a house really depends upon the size of the loan that you’re looking for, as well as your income. For our smallest loan, we’d like to see between R181357.18and R226696.47or at least access to it.

Why flipping houses is a bad idea?

If you don’t have enough time to dedicate to the flip, then you’ll end up needing to carry the property for much longer, and every extra month means more payments to lenders and utility companies. Flipping houses is a bad idea if you can’t devote a significant amount of time to completing the project.

Is House Flipping legal In South Africa?

Property flipping is a widespread practice used throughout the real estate industry. As long as it is done correctly, property flipping is entirely legal. In fact, a person can earn a decent and legal living through the practice of property flipping.

How long does it take to flip a house In South Africa?

According to a 2018 study by Attom Data Solutions, it takes an average of 180 days or about six months to flip a home. In this case, the flipping process includes buying the home, making the renovations, and selling it to its next owner. However, keep in mind that figure was an average.

What makes a good house flipper?

To be a successful house flipper, you should have plenty of cash at the ready to purchase a home outright rather than obtain a mortgage. A mortgage process slows you down and becomes risky because you will have to make payments until the property sells.

What are the pros and cons of flipping houses?

The Pros and Cons of Live-In Home Flipping

[See: A 14-Point Checklist for Land Investing.]

Pro: There are no income taxes, if you do it right.

Con: You move around a lot.

Pro: You have one mortgage instead of two.

Con: Your home is a construction zone.

Pro: You’ll save money, especially if you do the work yourself.

Is buying a flipped house bad?

There’s nothing wrong with buying a flipped home especially if it has all the good features that you ever dreamed of and you can take a mortgage to buy it. A flipped home is just a renovated and aesthetically-improved version of a seemingly distressed property.