Published On: Fri, Jan 22nd, 2016

Flipping Factories: How Property Developers Profit The Smart Way

There was once a time where the property market was pretty much stagnant. No-one had the money to buy anything, and people were stuck with almost worthless assets. The good news is that today’s economy is improving. People are spending money again, although they are somewhat more cautious about doing so.

Factory

The same applies to the industrial property market too. With thousands of new startup businesses each year, many are keen to buy factories. Existing firms may also wish to buy new industrial premises to expand their operations. As you can imagine, the demand for industrial property is growing.

You’ve no doubt heard about “flippers”. This is where people buy properties, fix them up and sell them for a profit. There are even TV programs that give you an insight into this lucrative market. But, what you may not have known is that more entrepreneurs are doing the same thing with factories too!

Let’s face it. Industrial properties don’t offer exciting prospects when it comes to new development projects. But, this is where some savvy investors are cashing in. Here’s how they profit from their work the smart way:

They buy factories that offer prospects

It doesn’t matter what type of property you buy. If you buy one that doesn’t have any prospects, you’ve just wasted your money. Choosing the right factories is something of an art form. To some people, an old crumbling factory is a waste of money. But, to others, it can open up a scope of possibilities.

For example, in the UK, a famous factory redevelopment is in Birmingham. The Custard Factory, as it’s known, was once owned by Bird’s Instant Custard (hence the name). Today, it is a center full of creative and digital workspaces.

It makes sense to consider what possibilities each factory can offer. In the example I gave above, the redevelopment worked because the factory is right in the heart of the city. Had it been in a more rural location, it may not have worked.

Savvy property developers only select factories they know will offer more value.

They team up with building contractors

When it comes to renovating an old factory, it’s vital that one keeps their costs down. Savvy factory flippers have an army of people at their disposal. These individuals may be friends, family members or trusted tradesmen.

They will provide a plethora of services at discounted rates. In return, they can enjoy getting assigned regular work.

One thing that new flippers do is make mistakes choosing their workforce. They might select people they’ve never worked with before. And that results in paying retail or higher prices for any work carried out!

Usually, experienced flippers will have built up a network of contractors during previous roles.

They conduct extensive surveys before they buy

Buying a factory is a large investment. That’s why it pays to carry out a range of extensive surveys before handing over any money. They check for issues such as foundation and subsidence problems. And they also clarify whether there are any environmental problems.

For instance, did the factory produce toxic chemicals? If so, did any of them get dumped on the site? If a new factory were to open on the site, how would it affect the environment? Take a look at http://www.michigansurveying.com to see the kinds of surveys that get carried out.

Many factory flippers buy properties with other investors. It’s important that everyone is happy with each proposal before they pledge any money. Otherwise, they could end up making a huge loss.

They carry out comprehensive clean-up operations

Once factory flippers buy properties, the first thing they do is clean them up. Everyone knows that people are more likely to buy properties if they are clean. Otherwise, the sellers could get offers lower than the expected market value.

First of all, they arrange for rubbish and debris to get collected and disposed of. Some items could get recycled while others may have to end up going to landfill sites. Usually, the previous owners leave factories in a sorry state. That’s why it’s vital to clear the interior and exterior of the factories first.

Next, they’ll do some thorough cleaning inside of the factory. To begin with, they’ll use industrial floor scrubbing equipment. Examples can get seen at http://www.sweepscrub.com/collections/scrubbers. Once that gets done, it’s possible to determine if there is any damage to the floor.

In a factory, most, if not all floors get made from concrete. Over the years, heavy machinery and foot traffic can damage concrete. It’s only once the floor gets cleaned that the damage can get assessed and repaired.

Once the floor repairs get made, it’s time to paint them and then coat them with a protective layer. Doing such work makes a factory more viable for prospective buyers. That’s because they can just “move in” without doing much work.

As is often the case, many factories will also need other repairs too. For example, doors and windows may have got vandalized and need repair or replacement. Offices will need renovation (i.e. new carpets, painted walls).

With an army of people at one’s disposal, all that work can get carried out in a short space of time. That’s crucial for factory flippers because they need to sell soon after buying!

They set up open days

Once the factories get refurbished to a high standard, they are ready to get sold. Factory flippers have different ways of unloading their properties for a profit. One proven way to generate interest in their factories is by holding what’s known as an “open day.”

This is where people from the local business community come to inspect the factory with a view to buying it. Factory flippers may also invite local government officials. That’s because they often have useful contacts that may wish to buy those properties.

Once they’ve held an open day, some visitors may express an interest in buying the factories. Otherwise, the factory goes on sale through local commercial realtors. In some cases, those factories might get sold at an auction.

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