Real estate investment in the Valencian Community: how house flipping works

Summary: house flipping means buying a property with potential, refurbishing it and selling it with a margin, usually within months rather than years. NEXEVO manages the full cycle – sourcing, auctions, paperwork, refurbishment and sale – in Valencia, Alicante and Castellon, with a target profit of 15-20% per operation.

Real estate investment is not only about buying a home and waiting years for its value to rise.

There is another strategy: finding a property with potential, buying it at the right price, refurbishing it and then selling it with a margin. This is what we call house flipping.

The process looks simple: buy, refurbish, sell.

But the profitability of an operation is decided, to a large extent, before the works begin. You need to find a good opportunity, calculate the costs correctly, identify possible risks and estimate a realistic exit price.

At NEXEVO we support the investor through the full cycle: sourcing, analysis, acquisition, paperwork, refurbishment and sale.

Where can good real estate investment opportunities be found?

One of the most common mistakes at the beginning is to search only on property portals. When an interesting property appears on a mass-market portal, it may already have passed through agents, investors and other professionals.

That is why other channels should also be analysed:

• Real estate auctions.
• Bank-owned assets.
• Private portfolios.
• Off-market deals.
• Inheritance situations.
• Owners who need to sell quickly.
• Properties that require significant refurbishment.
• Networks of agents and real estate professionals.

At NEXEVO we work with different channels to find opportunities in Valencia, Alicante, Castellon and other municipalities.

But finding a cheap property does not mean finding a good investment. The important question is: why is it cheap?

Investing through real estate auctions

Auctions are one of the channels with the most potential and, at the same time, one of the channels that requires the most technical knowledge. Competition is often lower than in the open market, but the margin for error is also smaller: in many cases it is not possible to visit the inside of the property before bidding, a deposit must be paid to participate, and the situation regarding charges, debts or occupants may not be fully clear until after adjudication.

That is why, before bidding in any auction, we study the available documentation – nota simple, registered charges and occupancy situation – calculate a maximum purchase price with a safety margin, and only then decide whether to participate. Below we explain step by step how we manage the process, from the bid to adjudication.

When a cheap apartment can become expensive

A price below market level may represent an opportunity, but it may also hide problems. Before buying, we study the available information:

• Condition of the property and the building.
• Possible pending or expected extraordinary community charges.
• Documentation: nota simple, occupancy certificate and energy performance certificate.
• Registered charges or debts over the property.
• Previous modifications or refurbishments that were not legalised.
• Habitability and installations: electricity, plumbing and general condition.
• Possible technical problems, including the building technical inspection (ITE) if the building is required to pass it.
• Location, local demand and ease of resale.

An apartment can look like a bargain and become a bad operation if costs appear that had not been considered. A refurbishment can fix an old kitchen, improve the layout or renew installations. What a refurbishment cannot fix is a bad purchase.

How do you know if a home is really a good investment?

Before buying, we calculate the numbers. We do not calculate return simply by comparing the purchase price with the possible sale price. The full cost must be analysed:

Purchase, including ITP or AJD + notary and registry + refurbishment + holding costs such as community fees and IBI + marketing + sale costs, including municipal capital gains tax when applicable.

Then we compare that figure with a reasonable exit price.

Another key element must also be considered: time. Achieving a certain return in a few months is not the same as achieving the same result after keeping capital tied up for much longer. That is why we analyse return, risk, liquidity and timeline together.

These items are indicative and depend on each operation and each municipality; they do not replace advice from a gestor or tax adviser before committing to a purchase.

What return do we look for?

Every operation is different and no return can be guaranteed in advance.

At NEXEVO we look for projects where we can work with a target profit of around 15-20%, provided that the prior analysis, costs and market conditions allow it. The final result may be higher or lower.

If we study an opportunity and the margin does not compensate for the risks, we do not move forward. We do not need to buy any property. We need to buy well.

How an operation works with NEXEVO

1. We analyse your investment and look for opportunities

The first step is to understand how much you want to invest and what type of project you are looking for. From there, we select properties that may fit your criteria.

We do not limit the search to a single city. We can analyse opportunities in Valencia, Alicante, Castellon and other locations when we see an interesting combination of price, demand and exit potential.

We carry out a first study and present the operations we consider interesting. You decide which ones you want to analyse in greater depth.

2. We study the selected operations

When you choose one or more projects, we go deeper into the analysis: available information about the property, location, demand, possible costs, maximum purchase price, possible sale price, initial refurbishment estimate and main risks of the operation.

In some auctions it is not possible to visit the interior of the property beforehand. In those cases we work with the available information and use a prudent estimate, which is later adjusted once we have access to the property. It is also advisable to keep a reserve for possible contingencies during the refurbishment, especially in older homes and buildings.

The aim is to answer a very specific question: how much can we pay at most without losing the margin of the operation?

3. We participate in the auction

When we believe an opportunity makes sense, we agree with you on the maximum amount we are willing to pay. We manage participation in the auction and submit the bid within the established limits.

If another buyer exceeds that price, we do not continue bidding simply to get the property. An auction is not won by paying more than everyone else. A good operation is achieved by buying at the right price. If that opportunity does not work out, we look for the next one.

4. Adjudication, paperwork and refurbishment

If we obtain adjudication, the execution phase begins. We manage the documentation needed to complete the acquisition – deed, Land Registry registration and, where applicable, updates to the occupancy certificate or energy certificate – and structure the operation through the company linked to the project when appropriate.

We then coordinate the work required before and during the refurbishment:

• Technical coordination and documentation.
• Permits and licences when required.
• Administrative procedures and coordination with the owners’ community or neighbours when needed.
• Contractors and professionals, organisation of the works and site monitoring.

Once we can fully access the property, we check its real condition and adjust the refurbishment budget. Then execution begins.

5. We refurbish with the final buyer in mind

A home intended for house flipping is not refurbished according to our personal taste. It is refurbished with the future buyer in mind.

That is why we prioritise what can really improve functionality and commercial appeal: layout, kitchen, bathrooms, electricity and plumbing when necessary, lighting, use of space, finishes and general presentation.

We also avoid overinvesting in elements that the market may not value later. The type of refurbishment must fit the property, the area and the likely buyer.

6. We prepare the sale while the works move forward, and close the operation

We do not wait until the refurbishment is finished to start thinking about how the property will be sold. While the works are underway, we prepare commercial documentation, exit strategy, positioning, coordination with real estate collaborators, home staging when appropriate, professional photography and presentation.

The aim is that, when the home is ready, marketing can begin without losing time. Time also affects return.

When the property is finished, final marketing begins. We work with our real estate collaborators to find a buyer and manage the sale. Once the operation is closed, final costs and the financial result are calculated according to the structure established beforehand.

The cycle is: Opportunity -> Analysis -> Purchase -> Refurbishment -> Sale.

Valencia, Alicante or Castellon?

There is no province that is always better for investing. A cheap home in an area with little demand can be a worse investment than a more expensive one that is much more liquid.

That is why we do not select operations only by location. We analyse entry price, real demand, buyer profile, refurbishment needed, possible exit price, competition, risks and estimated sale time.

A good opportunity may be found in Valencia city, its metropolitan area, Alicante, Castellon or another municipality. We follow the numbers, not the postcode.

What type of homes do we look for?

There is no single profile. We are especially interested in finding the right combination of margin, demand and liquidity.

To do that, we analyse factors such as location, transport and services, natural light, layout, condition of the building, lift when relevant, likely buyer profile, final price and ease of marketing.

A high return on paper is of little use if the home later proves very difficult to sell.

Which operations do we prefer to avoid?

A low price does not compensate for every risk. We may reject projects for reasons such as:

• Major structural problems.
• Complex documentation situations: pending ITE without a reserve fund, expired occupancy certificate or unresolved registered charges.
• Charges or debts that affect viability.
• High extraordinary costs.
• Poor location or weak demand.
• Homes that are difficult to market.
• Refurbishments that may consume the whole margin.
• A purchase price too close to real market value.

Knowing when to say no is a fundamental part of investing.

Why invest with NEXEVO?

Because we can manage the whole process with one team: sourcing, analysis, auction, paperwork, refurbishment and sale.

You do not need to find one person to source the property, another professional to manage the auction, specialists for the paperwork, a refurbishment company and then an estate agency. We can coordinate the full cycle. You decide to invest. We handle the rest.

Do you want to do part of it yourself?

You can. You do not need to hire full management. You may already have your own refurbishment company, or you may want to sell later through your own estate agency, or you may only need help finding opportunities and participating in auctions.

You can hire only the stages you need: opportunity sourcing, property selection, deal analysis, auction search, bid preparation and management, documentation support or management of specific project phases.

This way you can personally manage part of the investment and rely on NEXEVO where you really need us.

Frequently asked questions about real estate investment and house flipping

Are you looking for a real estate investment opportunity?

If you want to start an operation, the first step is to study your capital and define what type of project you are looking for.

NEXEVO can manage the whole cycle, from finding an opportunity to refurbishing and selling the home. Or we can help only with specific phases.

At NEXEVO we search, analyse and execute. You decide how you want to invest.