Today’s post shows you how to do a flip from a completely remote destination using my own situation as an example.
Why I had to flip the property remotely
I bought this particular property about eight years ago and lived in it for a number of years before deciding to move to Cape Town last year to be closer to my girlfriend.
Aside from the fact that the country was on lockdown level 5 at the time, it would be impractical to fly up and down to do this deal. So, moving left me with 2 choices regarding the property: keep renting it out or flip it and sell it for profit. I decided on the latter.
Get a Trusted Property Inspector
The first thing you need to do is get a trusted property inspector to assess the property. In my case, I hadn’t gone to the property or seen it since I moved to Cape Town, so I didn’t know what condition it was in.
I trust my property inspector because I’ve worked on numerous projects with her. This is an important point to note when it comes to a remote investment. You need someone on the ground who is local, has the experience and expertise to be able to manage this project for you.
A good property inspector will take pictures and videos of all the different issues within the property, as well as giving a quick explanation of what’s going on.
Get accurate, verified cost of repairs and renovations
She then sent me a very comprehensive cost breakdown report. A detailed property condition report, combined with the cost breakdown, will give you piece of mind and a very accurate idea of what’s going to be done.
One of the things you’ve got to be careful of is you can’t necessarily give a builder a power of attorney. By that I mean you can’t just give them the full amount of money before any of the work done. Pay a small deposit upfront as well as pay for all the materials. Those material purchases need to be backed by some sort of invoice.
My inspector gave me about six original Builders Warehouse invoice slips, so I knew exactly what I was paying for and how much it costs.
I paid a small upfront deposit of about 30 percent for her labour costs and then I paid for all the building materials.
Pay a deposit and only pay for materials where you’ve seen the slip. That way you always have proof.
Get frequent updates
After the renovation, she provided me with another report that shows me the work that has been done.
For instance, she fixed the cupboard and had the little breakfast bench repainted. The oven and stove have been replaced with new ones. You know, we’ve fitted a little mosaic thing where the splatter was. We’ve, you know, updated the door handles and fixed all of that stuff.
These are all the updates I received:
- What the property looked like before
- The work that needed to be done
- All the purchase slips
- Work that has been done and is in progress
- The post renovation report
Feel free to add updates that are important to you.
Get a good estate agent
The next step is to get a really good and reliable estate agent. I worked with Pam Golding on this specific deal.
Make note of this: it doesn’t matter what an estate agent says, their commission is always negotiable.
What I tend to do with estate agents is they’ll send me their offer to purchase or they’re their mandate document, which says that they want to charge. They want to charge, for instance, 7.5% excluding VAT. That’s crazy.
What I do is give them performance-based commission options.
I say to them, “if you can hit a R1.5million sale price, I will give you 6.5% commission. If you hit a R1million sale price you’ll get a 6% commission and if you hit R950 000, you get 5%.”
This rewards them for getting me a better deal. They also get rewarded by working harder, which is fantastic.
A great estate agent will create a really nice look and feel of the of the property.
They’ll taken some nice pictures, have it look really clean and neat.
To recap, if you want to do a remote flip, you’ve got to get a good building inspector in place, make sure that the building happens on time and on budget, and then use an estate agent to be able to create a pretty picture and sell the property for the price that you want.