flipping
Flipping is buying a property, improving it quickly and selling it for a profit, and it looks far easier from the outside than it is.
In plain English
Flipping looks like the fastest money in property. Buy low, renovate, sell high, repeat. Television has made it look almost leisurely.
The arithmetic is considerably less friendly than the story, and it is worth doing before you begin rather than afterwards.
You pay closing costs when you buy, which in Nigeria can exceed ten percent. You pay for the renovation, which will cost more and take longer than your estimate, because it always does. You pay agency and legal fees when you sell. You pay capital gains tax on the profit. And you carry the property the whole time, paying service charge, security and interest if you borrowed.
A property bought at ₦40 million and sold at ₦50 million has not made you ₦10 million. After everything, it may have made you very little, and it consumed eight months of your life.
It works for people who genuinely know construction costs, who can manage contractors in Nigeria without being robbed, and who can sell quickly. That is a real skill and it is not the one most people bring.
Count every cost before you buy. The margin you think you have is usually the margin somebody else has already taken.
You buy at ₦40 million, spend ₦6 million renovating, and sell at ₦52 million. Closing costs, agency, legal fees, tax and eight months of holding costs consume ₦4.5 million. Your ₦12 million gross profit is ₦1.5 million, for eight months of work and considerable risk.
Questions people ask
Is flipping profitable in Nigeria?
It can be, for people who genuinely understand construction costs and can manage contractors. For everybody else it usually returns far less than expected.
What is the biggest mistake?
Underestimating renovation cost and time, and forgetting the holding costs. Both are entirely predictable and both are routinely ignored.
Is it better than holding for rent?
Different things. Flipping is a job that pays once. Holding is an asset that pays repeatedly. Most people would be better served by the second.
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