If there is so much money to be made by renovating/building and flipping why isn’t everyone doing it?

Firstly, you need to have a few puzzle pieces:

1. Money … Not everyone has the borrowing capacity or cash required. Borrowing for a build can be tougher than borrowing for a ready-made house.
2. Vision … Not everyone walks into a dump and can see what it could become … even with all the renovation TV shows these days.
3. Needs … You must be willing and able to go without the property for now. Not ideal for a family with a 3rd kid on the way.
4. Time … Your job needs to be flexible enough to commit the huge amount of time required for a build/reno, even when using professionals. Even more if you plan to get handy yourself.
5. Smarts … meticulous smarts to get an edge on every piece (see below)
6. Grit … you might lose money. Like any business it’s not that easy to manufacture your product for less than you can sell it for. If you don’t get all the bits right, you could lose money. This has been masked in times gone by when a rising market enabled average operators to make a profit albeit potentially less than they would have made simply by holding a property.

Then your profit is made in 5 key parts:

1. Buy well: Buy the land at a good price.
2. Design Well: Design for the market you’re selling into, with the optimal floor plan, finishes, and amenities.
3. Approval: Getting approval for your dream design isn’t simple, especially if you want to push compliance boundaries. Success here is a big step forward.
4. Build to Budget: There’s a massive variance in builder pricing and quality. Choosing the right builder and executing to budget is a big success, and one of the reasons why experience is valuable.
5. Sell Well: Selecting the right agent and selling with the optimal strategy makes a big difference to the outcome.

Each part contributes approximately 20% of the final profit. Get them all wrong and you could make a loss. Get some wrong and some right and you might not make much.