The secrets to successful house flipping

Buying, renovating and selling homes is what Tom Hall does for a living. In the past 10 years he has flipped five houses and made an enviable profit.

His most recent project was a four-bedroom house in Melbourne’s bayside Hampton, which he purchased for $1.25 million in 2013. Hall made major improvements to the house, including a revamped al fresco dining area and new kitchen, at a total cost of $230,000.

He’s hoping to recoup these expenses and turn a sizeable profit when the house goes on the market for more than $2 million this spring.

Hall, an electrician and former real estate agent, says successful house flipping takes hard work, perseverance and a handful of simple rules.

Start small

Amateur renovators shouldn’t bite off more than they can chew. Select a small property as your first project with a view to buying a bigger one for your second.

“If you start with something small there’s less risk,” Hall says.

“I started with a one bedroom apartment in Carnegie. I had to earn my own deposit, bought it, sold it and doubled my money in three years so it was a good start.”

Buy at the right price

Research the property market to find a place that offers good potential capital growth. Familiarise yourself with sales data so you know a good deal when you see one.

Thorough research could see you bag a bargain, which means reaping a bigger reward once the renovations are complete.

“One of the most important things is buying at the right price, that’s one of the main things I look for,” he says.

Negotiate a long settlement period

A 90-day settlement will give you time to draft designs and organise trades well in advance of your start date.

“If you have a 30-day settlement, you haven’t got as much time,” Hall says.

Tailor to a target market

Some renovators make the mistake of customising their improvements for their own purposes. But Hall recommends keeping a specific demographic in mind. A couple without children was the prime market for a one-bedroom property in Windsor, which he purchased for $475,000. Adding a loft-style bedroom for guests or to use as a study helped fetch a sale price of $850,000.

Haggle

Every little bit counts when it comes to shaving down costs. Always ask for a trade discount when you’re buying supplies, keep an eye out for sales and make the most of connections who can offer you wholesale prices.