Hi Steve,
First of all, I really liked your book – I’ve read it several times and got a lot out of it. I want to start off my real estate investing career with flips – in other words, finding an undervalued property, paying a $1000 deposit plus another $4000 for legals, and have a simultaneous settlement and sale date, as laid out in your book. What I would like is to ask if you can point me in the right direction of a book, seminar or website or whatever, that details on how to flip properties here in Australia.
Before you ask, I have already scoured the forums for past posts for many hours, and half of them have different ideas on what a flip actually is. Your seminars concentrate on wrapping – are there any seminars that concentrate on flips?
You have accomplished so much in the last few years, and you are great example to follow.
Kind regards,
Daniel Simpson.
Hi Daniel,
Thanks for your post and I’m delighted that you enjoyed the book [exhappy]
What I would like is to ask if you can point me in the right direction of a book, seminar or website or whatever, that details on how to flip properties here in Australia.A ‘Flip’ is simply a property transaction that has a simultaneous purchase / sale date.
While the theory behind Flips (buy and sell higher) is a pretty straightforward, it’s really a niche rather than a wholesale market.
I don’t know of any specific products or seminars, which is why flips are perhaps best learned in the market place, with the aid of some thorough legal advice.
If you pioneer a process though it might become a good information product for you [wink].
Finally, a few words of caution:
1. Remember that there will be double stamp duty (and possibly triple stamp duty if NSW stamp duty changes are brought in!). This makes many flips uncommercial unless there is an appropriate margin.
2. If you regularly flip then your gains will be treated as income rather than capital gains (no 50% exemption).
3. It’s a strategy that works best when the market is buoyant and there are plenty of buyers. I’d be more cautious now the market seems to have changed.
Best wishes,
Steve McKnight
**********
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**********Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
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I’m going to have to disagree with Steve on his point #2. The 50% exemption for indivuduals making a capital gain is only when the asset has been held continually for 12 months or more. Thus, if you flip, or sell 364 days down the track, you will have the glorious honour of paying your marginal tax rate on all of the profit.
Wrappack
I think you have missed Steve’s comment with regards to the Tax treatment of a flip.
“If you flip regularly” then it is considered a business and the profit is treated as income.
Also with regards to the capital gains exemption bear in mind that for CGT purposes the effective date is the date of the Contract and not the settlement date.
Cheers Richard
richard at fhog.com.au
http://www.fhog.com.auThere is no such thing as a problem.
Just a solution waiting to be foundRichard Taylor | Australia's leading private lender
Daniel,
I located a U.S. book called “Flipping Properties, profits through buying for quick resale” at the back of the Australian Property Investor magazine (page 154 current issue) Haven’t read it or even seen it, but your question jogged my memory of it.
It can also be found at http://www.businessmall.com.au item no. BRO-1 $58.95 I hope this helps, cheers G7Hi guys,
Thanks very much for your contributions. The good thing is that I can look for properties two days per week solid, and I also have access to QVAS (Queensland Valuations and Sales) at http://www.abr.com, so I am confident I can find a good flip deal every 1-2 months. Obviously, I will get thorough advice from a solicitor – in fact I will try and find one who is familiar with what flips are, and has seen them done before. I’m not fazed by capital gains tax and double stamp duty, because it’s the process I want to learn, out there in the field. Even if only break even, or lose money, it will be an invaluable lesson for the future. I’m just tired of losing time by being scared to start.
Daniel.
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