Flipping properties is very popular across the world and South Africa. You have seen people do it on popular shows and probably in real life too. With South Africa’s expanding middle class and urbanisation, flipping houses can be a profitable business for anyone. The only thing you need to know is the ‘how to’ of flipping properties in South Africa.
Flipping is an investment strategy commonly seen in the real estate industry. It involves an investor purchasing a property with the intention of renovating it and then selling it for profit. The person flipping the house does not live in it but focuses on selling it to someone else.
In most cases, the houses that are flipped are old and not selling on the market. If you are looking for a way to make a profit and enter the property industry, flipping might be the best way.
In this article, we explore the concept of flipping and give you a few tips on how you can get started.
Benefits of Flipping Properties in South Africa
Some of the benefits of flipping properties in South Africa include:
Potential for High ROI (return on investment)
Flipping property has the potential to generate good profits. You need to identify undervalued properties with great growth potential. Once identified, you can carry out cost-effective renovations which add value to the property.
If the property is in a high-demand area, you may be able to sell your renovated property at a much higher price. As an investor, you need to carefully analyse your local property market, identify any upcoming trends and target properties with a high potential for appreciation.
Quick Turnaround
House flipping has a relatively quick turnaround time because it involves buying, renovating and selling a property within a year or less. This allows you to take advantage of any changing market conditions and short-term price fluctuations.
The short time frame is an advantage however, it also means that you need to be very efficient in managing the renovations, sourcing materials and coordinating with contractors. Ensure you have a well-structured strategy plan and maintain clear communication with all parties involved.
Capital Growth
By investing in areas with strong economic growth and improving infrastructure, you can benefit from natural capital appreciation, which can bring a significant boost to your overall profits. Make sure you have researched demographic trends, local economic indicators and infrastructure developments to identify strong properties.
Additionally, you need to monitor market trends and adjust your investment strategies to be flexible and adaptable to emerging opportunities.
Skills Development and Job Creation
Flipping property needs a range of skills such as project management, budgeting and negotiation. As you get experience in property flipping, you will gain new skills and enhance your overall investment expertise. These skills can be transferable to other areas of business, providing.
Additionally, house flipping provides employment opportunities for contractors, construction workers and other professionals involved in the process. As you invest in real estate, you generate demand for skilled labour, materials and job growth in the surrounding community.
Urban Rejuvenation
By investing in and improving run-down properties, you play a role in revitalising the surrounding community. By transforming old properties into modern homes, you can enhance the aesthetics of the neighbourhood, increase property value and attract new residents. This all leads to more business for you and ultimately more profits.
These benefits highlight just how much of a good revenue stream flipping is. Now, let’s look at some steps you can follow when starting out your property flipping journey.
Steps on How to Start a Property Flipping Business
Here are some steps you can take when starting your own property flipping business.
Step 1: Research, Research and More Research
Much like any other business, you need to do a lot of research before you can get started. You need to have a good understanding of the property industry, its trends and all the intricacies that come with it.
When conducting your research, consider the following:
- How many and how quickly are homes selling in a particular area?
- What is the price of homes in the area?
- What is the condition of the homes and why?
- What amenities are close by (schools, parks, hospitals etc.)?
- What are the future developments in the area?
- What are local regulations that could impact your house flipping?
With proper research, you should be able to answer the above questions without any problems.
Step 2: Develop a Business Plan
You need to create a detailed business plan outlining your objectives, target market, investment strategy and financial projections. This business plan will become your roadmap for your property flipping business and help you monitor your progress.
When calculating your costs as part of your business plan, consider the following:
- Financing costs
- Repair or renovation costs
- Cost of labour and raw materials
Step 3: Get Funding (Very Important!!)
Once you have drawn up a budget, you can see how much money you will need for your business. You may need to apply for a loan, access a line of credit or partner with other investors to get the funds you need.
Property loans are accessible at traditional banks or platforms such as TUHF.
Step 4: Assemble your Team
Get yourself a reliable team of professionals who will help you with flipping your property. The right team will work with you on multiple projects which is great for consistency. Consider getting a real estate agent, property lawyer, accountant, contractor and construction worker.
Having a team of experts will provide you with guidance and expertise throughout your property flipping process.
Step 5: Find the Right Property and the Right Location
From your research efforts, you should have found the right location for your project. Within that location, you must find the right property. Look for properties that are close to good amenities and ones that are surrounded by improving infrastructure.
Work with a real estate agent to find properties which are undervalued, have good bones and have the potential to become a great flip.
Step 6: Plan and Execute Renovations
Once you have found the right property in the right location, you can begin your renovations. Coordinate with your contractors to ensure that all renovations are completed efficiently and within the set budget.
Step 7: Market and Sell your Project
Once everything is done in terms of renovation, you can put your flip on the market and start the selling process. Use professional photographers, staging tools (furniture) and marketing strategies to showcase the property and its improvements. A good marketing strategy will ensure that you maximise the appeal of your property. This guarantees interest in not just your current property but other properties you will do in the future.
Now that you have a better understanding of how to flip a property, you can get started on it. Remember, the property industry is ever-changing so make sure you do proper research and speak to other professionals before you dive in.
For more information on the real estate industry, read our property development articles. Tickets are on sale now for the 2025 SME SA Funding Summit! Visit SME SA Events to get yours.
