Although it’s common for people to invest in the real estate sector in Bangladesh, with the enactment of a new law it has gotten even easier for both the new and existing investors to invest in real estate. Therefore it is also getting easier to conceive foreign real estate concepts such as flipping a house. Now for a flipper house, if done correctly, it can be a win-win situation for both the flipper and the buyer. Assuming the flipper sells the property at a higher price than they paid for it, they can make more money even if we take all the renovation expenses into account.
On the other hand, it can be a bargain on the home for a new buyer. Considering everything is fresh and new. But what actually is a flipper house and what kind of benefits are we talking about? And more than that, what law has made it easier for Bangladeshi real estate investors to invest in real estate such as a flipper house? In this article, we will discuss the benefits of a flipper house and everything that you need to know.
What is a flipper house?
To put it simply, a flipper house is a property that is bought and renovated by a real estate investor or “flipper” for the purpose of selling or ‘flipping’ to a buyer at a higher price than the investor initially paid for it. Whereas the term “flipping” can be applied to any asset, it is more popularly used in the real estate sector. Now that we have cleared the jargon, let’s talk about the methodology and how the entire process is carried out.
The way it works
It all starts with property selection. A real estate investor first finds a suitable property to flip. But multiple factors such as the local real estate market, location of the property, value, condition, renovation costs, and the architectural uniqueness of the property are taken into consideration before the selection. However, underpriced homes in a high-valued locality that also require fewer modifications are the most suitable. After the selection, it is now time to finance the property. Keeping profitability in mind, an investor may finance the purchase with cash or a short-term loan. The goal here is to minimize the cost and buy the property at the lowest possible price.
Now depending on the current condition of the house, the flipper may go for a total renovation or just cosmetic improvements. Again the goal here is to maximize the profit margin by minimizing the renovation costs. Once done fixing or renovating the house, a suitable buyer for the property is pursued. Now there are a lot of things to consider when purchasing a flipper house. It may surprise you that a flipper house can be the center of many real estate scams. So if not proceed with caution, a buyer may fall victim to such scams. That is to say, a proper home inspection is necessary before purchasing any house.
Benefits of a flipper house
- Investing in a flipper house can be a major entryway to the sector for first-time real estate investors. Since buyers can score a bargain, it may give low-income, first-time buyers an opportunity to purchase a property that they can afford.
- A flipper house is a complete package and move-in ready. As these kinds of houses tend to be renovated properly (often right down to the appliances), buyers don’t have to worry about fixing stuff.
- If you have a good understanding of the local real estate market and swing the bat in the right direction, you can walk away with a large amount of profit. That too, within a short time frame.
For the real estate investors of Bangladesh
Now about the big question, why should you care? A lot has changed in the real estate sector since the new budget of FY 20-21 was declared. Of all the changes, the enactment of a new law instigated by the parliament states that there won’t be any inquiry into undisclosed money invested into real estate. This creates a huge opportunity for new investors as well as existing ones who are interested to invest in the real estate sector but were not able to do so previously. And what better way to invest your money than a flipper house? With all the added benefits of a flipper house, investing in a flipper house can be the holy grail of making big bucks and can give you a ladder to climb high on as a real estate investor.
Considering the benefits of a flipper house and the current state of the real estate sector in Bangladesh, investing in a flipper house can be a great investment. But there are certain things that need to be taken into account. Real estate scams and poor property selection can be a major money-pit for inexperienced investors. As it is required to have a high learning curve, it is advised to have a sound knowledge of real estate and construction before you begin. But rest assured, you will be glad that you have made the choice to invest in such a property.
