A property expert has revealed his top tips for successfully flipping houses – revealing how anyone can turn the process into a huge money-maker.
Real estate investor Damon Woodward, 31, from Winnipeg, Canada, has been flipping properties since 2018, and has successfully worked on more than 80 homes, from single family units to apartment buildings.
Damon shares his wisdom on Instagram where he has racked up more than 150,000 followers, helping others invest in property.
Pro: Professional property flipper Damon Woodward is sharing his top tips for renovating homes for profit, revealing how he rakes in six figures a year by transforming houses
Now, he has revealed his top tips for people looking to cash in as property flippers – and interestingly, viewing your potential new home is the last task on the list.
Six tips for flipping homes successfully
Do your research: Look at the history of any property you are planning to buy, and see what it last sold for
Be wary of structural issues: When you view a property, make sure that you are on the lookout for major and costly problems, like foundation cracks, and heating issues
Don’t forget the exterior: You can’t always judge a book by its cover, but many home buyers will
If a deal seems to good to be true, it may well be: When buying a home, you need to be wary of properties that have incredibly low prices when compared to those around them – this could be a big warning sign
Always negotiate on the price: Make a note of any issues that you see while viewing a property and use these to get the price down
Don’t rush to sell: Not all properties will sell straight away. Don’t be panicked into getting rid of a home. Instead, think about renting it out until you can find a buyer
‘I have a very simple formula that I stick to when it comes to flipping houses,’ Damon told Jam Press.
‘I buy properties at 40-60 cents on the dollar – with the dollar being the sale price. I renovate them at 70 cents on the dollar, then sell them at 100 cents on the dollar.
‘It always costs 10 cents to sell and there are 20 cents on the dollar of profit at the end.’
Damon swears by his financial method, which he claims has secured him a six-figure profit per year and helped him build up a portfolio of over 70 properties for long-term wealth.
Sharing an example, in 2020, the property expert bought a run-down three-bedroom house in Winnipeg, Canada for $90,000.
In the before shots, the home can be seen in desperate need of some TLC, with cracked window sills, botched paintwork and a dated kitchen.
The house was given a stylish update with fresh paint, new appliances and sleek new furnishings – which saw it sell for $174,900 (approx $84,900 in gross profit, not counting the refurbishment expenses).
Speaking of the project, Damon told Jam Press: ‘I redesigned the kitchen.
‘Then I created a laundry room on the main floor so that the new buyers would have a very functional space instead of going up and down the questionable stairs into the basement.
‘Of course I also added nice light fixtures throughout.’
Damon’s favorite flips involve simple cosmetic changes, such as to kitchens, bathrooms and flooring – although he doesn’t mind doing a large-scale renovation, as long as it fits within the formula.
Here are his top seven tips for flipping homes; from creating a checklist to what to look for before you even step foot inside the property.
Before: Damon purchased this home in Winnipeg, Canada, for $90,000 in 2020, and sold it for a whopping $174,900 just a few months later
After: The sale of the home, seen after the renovations, netted Damon $84,900 in gross profit
Oh dear: Damon is now sharing his tips for others who want to try flipping properties for themselves, including how to avoid money pits that will cost you more than you earn
Easy as can be! One of Damon’s top tips is to do research about any potential homes that you are planning to buy, particularly when it comes to previous selling prices
COMPLETE A CHECKLIST – AND DO YOUR RESEARCH
While it might be tempting to book in lots of viewings, the first thing you need to do is create a substantial checklist so that you know what you need, what to look out for and what might cost you money to fix.
Do your research and get as much information as you can before approaching the seller.
Damon said: ‘First, I Google the address to see if I can pull any information about the property and seller, so that if I have to negotiate on the property I have as much information as I can get.
‘I’d get one of my agents to pull the old listing so I can see when the seller purchased the property and what price they paid – this helps gauge if they have any equity in the property so that I can purchase it at a discount.’
After you have a decent idea of the original price of the home, do a comparison search of similar properties in the area that have sold recently – which can help you determine how much you will make after the renovation.
Comparable properties must have the same number of bedrooms and bathrooms, be built the same year or decade and have either the same square footage of living space – or be at least within 300 square feet of each other.
The properties must also be the same style.
Damon said: ‘This helps tell me what type of renovations I would need to do to the property to get the same price.
‘If all of the recently sold properties had a garage and the property I was viewing did not, that could be a sign that I might have to build a garage if I want to sell mine for the same price.
‘I would factor that in if I was to write an offer to purchase the property.’
WHAT TO LOOK FOR WHEN YOU VIEW THE PROPERTY
Once you have a figure in mind for the potential sale price and can estimate how much renovations will cost to complete, it’s time to book in a viewing.
Damon said: ‘By having the sales information, I can walk through the house, compare this to my findings and, if it’s a good deal, can give the seller an offer on the spot.
‘This helps protect my time so I don’t have to come back to the house again to view it and I will already know what price I am willing to pay.’
During the walk-through, visualize the recently sold properties that you researched and draw a mental comparison between those and your potential new project.
Check for structural issues, foundation cracks, plumbing and electrical faults, investigate the heating system and any visible damage to the house.
Damon also studies the property for anything that can be salvaged – noting ways to save money during renovations.
Key areas that can be re-used include flooring, kitchens, bathrooms, windows, doors and the roof.
Key detail: Damon says a lot of people forget to factor in the exterior when it comes to calculating costs, but he insists it is an important part of the process
Essential: He explained, ‘It’s important to look at the exterior and how the property appears from the street and its “curb appeal”‘
Neighbors: Damon also advised checking out whether there are plans to renovate elsewhere in the neighborhood as this can also drive the price of a property up
Then and now: When it comes to warning signs, Damon says that run-down homes don’t need to be avoided, but any properties with structural issues could become money pits
DON’T FORGET THE EXTERIOR
But it’s not all about what’s on the inside and often it really can be a case of judging a book by its cover.
Damon said: ‘It’s important to look at the exterior and how the property appears from the street and its “curb appeal”.
‘Do also look around for the offering in the neighborhood and see if there are plans for regeneration in the area, as this could boost the value of the house when you do eventually sell it.’
HOW TO KNOW IF A PROPERTY IS A BAD DEAL
There are key things to look for to indicate the property you’re looking at isn’t worth buying.
Damon said: ‘Anything structural could be a bad deal.
‘Cracks in the foundation or water leaking in from outside are both red flags when looking at a property – foundation issues can be quite costly.
‘If there are no comparable properties that have sold in that price range this might indicate it’s a bad deal because you can’t be sure what the property will sell for after its renovations.
‘As a real estate investor, buying a property at full retail value is not ideal – you want to go for something that is a little less than it “should be”.’
Warning: ‘Cracks in the foundation or water leaking in from outside are both red flags when looking at a property – foundation issues can be quite costly,’ he explained
Take care: Damon also cautioned that not all properties will sell straight away, even if they have been expertly renovated, and he said you should always have a back-up plan in mind
Alternative: He advises all property flippers to be prepare to rent their homes if they are not able to sell straight away
Market research: When you are looking for homes to buy, don’t be too quickly enticed by a property that is being sold at a much lower price than nearby houses
Look ahead: Damon explained that if a home is being sold at a much cheaper price than those around it, that means it may not be easy to sell when you have completed renovations
HOW TO NEGOTIATE PRICE
If the property you’re looking at is ideal but the price is a little high, Damon recommends writing in your offer that your price is ‘subject to inspection’.
He said: ‘During the inspection, I would carefully note all of the deficiencies and repairs that are needed to fix up the property and get contractor quotes for what it will cost.
‘You can then go back to the seller and let them know that it will cost more money to fix than originally anticipated and use that as a tool to negotiate a lower price.
‘Another thing that you can do is have your lawyer pull the title report for the property to see what is owed on the mortgage.
This will let you see if the seller has enough equity to give you the discount that is required for you to get the price you need.
‘If the seller doesn’t have equity greater than the discount you need, then it will be difficult to get a discount on the house.’
DON’T RUSH TO SELL
Don’t be afraid to walk away and be prepared for pitfalls along the way.
Damon said: ‘Even in a booming economy, not 100 per cent of properties sell, so it’s always best to have a back-up plan.
‘The way I like to structure my deals is that in the event that a property doesn’t sell, instead of discounting the price so much that we lose money on the deal, I will instead wait for a pre-determined amount of time after the average days on the market for the property.
‘If the property still hasn’t sold, I would then place a tenant in the property and refinance it.’
Damon then uses the money from the refinance to pay out the investor – or, if a small amount of their money is in the deal – he pays them interest.
The property expert evaluates whether to refinance again or sell the property and pay out the remainder of the investments from the proceeds of the sale.
He said: ‘That is one way that I will save a deal if something unexpected happens.
‘If the after-repair value that I was expecting ended up changing or being inaccurate, or if there was an economic downturn part-way through the project and I would have to sell at a loss, I would execute plan B without any emotion to avoid a loss.
‘As long as it was pre-determined and discussed beforehand, the chances are the relationship with the investor will remain strong and you will continue to do more business together.’
Damon is also the President of Blackcard University, an academy that teaches students about the real estate industry.