House flipping: watering real estate bears fruit

We all aspire to live in the ideal house. A cozy, comfortable, well-decorated place… However, not all of us are willing or have the time to buy a property and transform it. Construction, furnishing, painting… Paradoxically, turning a house into “the house of our dreams” can become a nightmare. Fortunately, there are companies dedicated to do this job for us.

In recent years, the American term “house flipping” has gained notoriety in Spain. The concept consists of acquiring real estate (those that cannot be separated from the ground) in order to renovate it and sell it quickly at a higher price. In this way, companies in the sector make a profit in exchange for offering buyers “the house of their dreams”.

If we want to carry out a house flipping, the first step would be to select the real estate that we are going to acquire. We can start with those that simply needs some modifications (a foreclosed house) or that needs a complete renovation (a commercial property).

A multi-tasking process

Regardless of the selected real estate, a series of interventions would be necessary, so the “flippers” must rely on different actors to transform it into an attractive home for buyers, such as a renovation company, a designer/decorator, real estate agents in the area, a photographer or an architect.

This raises the question: how is it possible to finance these projects? It is true that not everyone can afford the costs of acquiring and renovating real estate. However, it is possible to carry out a house flipping without these resources. How? By using alternative financing methods such as crowdfunding, which allows investors to finance the project in exchange for a share of the profits it generates.

House flipping is an attractive project for investors, as it generates added value and ensures profits as long as the property is promptly sold. César Rivero, CEO of CDM Inversiones, states: “there are a lot of small and medium-sized savers who are eager to get returns on their money, so if a good opportunity is found, they will be willing to put money in”.

Generation Z and house flipping

House flipping is a particularly attractive business for members of the so-called Z generation. Therefore, it is expected for House flipping to continue its exponential growth in the coming years. The Generation Z is looking for ways to make a quick and cost-effective profit, investing in house flipping provides them with the opportunity to generate profits in return for an upfront contribution. Meanwhile, the property manager will take care of all the work necessary for the revaluation of the property.

The main tasks that the property manager must perform to ensure the success of the project are: