I was wondering if anyone on this forum has successfuly flipped a property and what the breakdown of costs versus profit is, generally speaking.
If you're using equity you already have in a property to acquire the new property, that you want to renovate and flip, would you count this as a cost to be reimbursed as part of the overall profit?
Also, if you have terms agreed with the vendor to get access to the property prior to settlement do you need to have insurance for the property or is that only once the property has settled?
Any help is appreciated.
Good in theory, but virtually impossible in practice.
In Australia you would have stamp duty to pay so you would need to resell it for much higher to make a profit.
You should really get insurance if you have an interest in the property. What if your vendor has a high mortgage and failed to insure the property and then it burns down – you would have to go to the trouble of suing them and if they don't have money or assets you would be wasting your time. Insurance may only cost you $70 for a month or so.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Flipped many a development site especially if it was too big for us to build on.
Did one a few years ago where our Buyer had buyer had applied for a DA to build 55 units on the site we were flipping.
What we didnt know is that they had also flipped the deal to someone else and on the day of settlement there was 2 transfer by Directions.Guess we made a very tidy 7 digit profit so we were happy.
Dont come along every day but when they do you need to take them and run with them.
Always have to have a fall back position just in case.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
very cool richard, thanks for the feedback
emz03 wrote:I was wondering if anyone on this forum has successfuly flipped a property and what the breakdown of costs versus profit is, generally speaking.If you're using equity you already have in a property to acquire the new property, that you want to renovate and flip, would you count this as a cost to be reimbursed as part of the overall profit?
Also, if you have terms agreed with the vendor to get access to the property prior to settlement do you need to have insurance for the property or is that only once the property has settled?
Any help is appreciated.
A few years back my self and most of the Cash flow turn key guys.All we did was flip. I was big working with the Higher end homes. When banks and loans dried up in the USA. We were forced to change the way we did business and thought process. Buying and holding was the way to survive .
Then when Obama there was a push for first time home buyers. For is int he business we then focused on homes $ 125k to $150k . Since then flipping is a huge risk here unless you deal with resellers( wholesalers) So we still basically flip.
Now there is two different flipping modules that I see. Flipping to buyers looking for cash flow rentals. OR flipping to the home buyer. Here in the USA we have found the niche market for us is homes $250 to $450k right now. Only looking for projects that have been left by builders that went under. These seem to be the the only properties that us or our cash lenders seem to look at. Now this is only for the Charlotte NC market cant speak for other markets in the USA.
Sorry if my spelling and grammar is not the best.
Sincerely
AlexTerryw wrote:Good in theory, but virtually impossible in practice.I disagree. My last 3 reno's would have profited me $20-25K after tax (paying the full CGT) if I had sold them. Not a bad profit for 4 weeks work (after my day job). You do need to buy under market and be pretty hands on but it's doable. We are accumulating and don't need the cash yet but we are looking into it more this year as we transition into retirement.
I figure we can do 1-2 little ones or 1 big one a year and with our CF we won't need to work.
hi Catalyst
Yes, renovation and selling would be good. But I took the term flipping to mean just buy and sell straight away – possibly without even settling on the property.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Terryw wrote:hi CatalystYes, renovation and selling would be good. But I took the term flipping to mean just buy and sell straight away – possibly without even settling on the property.
I hear that some people arrange an early access clause so they can rennovate and do just this.
Terryw wrote:hi CatalystYes, renovation and selling would be good. But I took the term flipping to mean just buy and sell straight away – possibly without even settling on the property.
OK. Yes in that case I agree.
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