Real estate properties, including those residential units like condominiums and houses and lots, are seen as valuable assets that could be turned into profitable investments. With the given long-term increasing market value of real estate properties, investors have a keen eye for various opportunities that they could make out of the potential of the property. As someone looking for an additional source of income, – it may also be your passive income– there are multiple avenues on how to make cash and improve your cash flow from your real estate properties, especially from your house and lot and condominium units. As such, Bria Homes will walk you through to benefits and common mistakes in flipping your house and lot or property investments in the Philippines.
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What is Real Estate Flipping?
Flipping is one of the investment trends that is already gaining momentum in the real estate market, nowadays. So what is flipping basically? Flipping refers to the buying of an asset with a brief holding period with the intent to make a profit faster rather than holding it on for a longer period as investors wait for it to appreciate. Though applicable to different assets that could be turned into an investment like cars, cryptocurrencies, and stock shares, flipping is commonly associated with real estate, especially with residential units like condominiums and house and lot. Flipping real estate properties is at times referred to as short-term real estate transactions.
Two Types of Flipping Real Estate
How does real estate flipping work? As it was earlier emphasized, flipping in real estate is a short-term investment strategy wherein investors purchase a property and resell it in a short time frame for a profit. There are two common types of real estate flipping.
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1. Buy, Hold, and Sell
The first type of strategy is where the investors pick out properties that are rapidly appreciating and resell them with little to no additional investment in the physical features of the property that could contribute to increasing its value. On a technical side, this strategy goes along with the increasing market value of these properties. This strategy is ideal when the market or the economy is in the expansion phase. This means that the customers have enough purchasing power to afford to buy the increasing market value of real estate properties.
However, investors who are into this strategy must be cautious enough to understand the various economic indicators to lower the risks of profit loss or worse, liquidation. As we have seen in the past, accruing market activity and the value of commodities have the tendency to suddenly plummet due to various possibilities, like different externalities and market manipulation. Thus, it is important for investors who are into this strategy or planning to venture into this must equip themselves with the appropriate skills and knowledge to make different risks into limitless opportunities.
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2. Reno Flip
The second type of strategy in real estate flipping is commonly known as renovate and flip or “reno flip”. Reno flip adds value to the real estate property by altering the features of the property. This is by improving the interior, making the utilities more sustainable and cost-efficient, or even including the renovations that your potential buyer wants to add to your property. This strategy does not only improve the features of the property but also increases the market value of these undervalued assets.
Those who are into reno flip should have the additional cash available to make the necessary improvements and renovations for your property to have the desired added market value. Unlike the first strategy, reno flip investors should have the foresight to see the final value after the renovations. This will only happen if the investors do the necessary research and cost-benefit analysis. By doing so, the additional cost for these improvements will bring the intended value rather than the additional cost without increasing the returns.
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Best Tips for your Real Estate Flipping in the Philippines to Avoid Flopping
The Philippines has been having a good-standing real estate market for decades. Hence, real estate properties have been one of the most sought-after commodities for many Filipinos– might it be for personal usage or for investment purposes. As a matter of fact, just in the 4th quarter of 2021, the Philippine Statistics Authority has approved 38,263 construction permits, which indicates an annual increase of 5.7 percent. By type of construction, residential reported the highest number of constructions during the quarter at 27,998 constructions or 73.2 percent of the total.
With the growing real estate market in the country, it is not surprising to know that real estate flipping in the Philippines has truly become a trend. Here are some of the tips before you enter the real estate flipping in the Philippines.
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1. DYOR (Do Your Own Research)
They say that “Knowledge is Power”. Indeed, the right knowledge gives anybody an advantage. Real estate investments are as volatile as other types of investment. Thus, before you pour your hard-earned money into flipping, you must know how you meet your ends with your means. Some of the things that you should consider are the zonal value of the property’s location, the material used, the market condition, inflation, and others.
2. Be Surrounded by your Trusted People
As mentioned already, venturing into real estate has a huge risk attached to it. That is why it is more important to surround yourself with the right and trusted people. People who have the right skills and mindset that could help you achieve the goal you set as you enter in real estate flipping. Also, diversify your network to reach as many people as possible from various industries.
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3. Secure your finances
Do not exceed your budget! Investing in real estate is surely a promising endeavor. But also keep in mind that you should not put all your eggs in one basket. Financial capital is indeed a factor in entering into flipping your real estate properties. But it does not have to cost you all your savings and investment. Like any other investment, there are risks in flipping properties that must be properly handled. Explore various financing mechanisms available in the market to help the capital needed as you begin your journey in flipping real estate properties.
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Interested in flipping real estate properties? Bria Homes’ offers affordable house and lot and condominium units that are perfect for any type of flipping. With Bria Homes’ strategic and accessible locations, you are assured of its increasing market value making Bria Homes’ development ideal for such ventures.