Over the last 20 odd years I’ve flipped a number of houses in Australia and New Zealand. Each time I’ve learnt more about what it takes to make money and I’ve got to say it’s not as easy as some might think.
The key though is to get the numbers as tight as you can possibly get them and work on a worst case scenario for sale.
When you flip, you have costs in and costs out and these have to be built into the spreadsheet for a total and potential profit. It’s hard to compete for a house if someone wants it for their own home and are prepared to do it up slowly. They don’t have the real estate fees on the way out, or the insurance and legal fees. There are also holding costs, if it takes a while to sell a property and you’ve borrowed from the bank, marketing of the property and of course at the end of it all the tax man wants his GST and income tax (depending on how you’ve structured it).
In the process of a flip you need to decide how much you will do yourself and how much you will spend on professionals. It’s always better to use experts as their workmanship Is normally superior and they’re faster.
I do quite often paint – more often than not, the exterior but that is time consuming and along with project managing the whole process, sourcing materials and finishes it may be a false economy.
The way I make money is to reconfigure space with concise plans, add value (perhaps an en suite or an extra bedroom or even an attic space), design and stage the space and I try and turn it around as fast as possible. It takes time to find a place that you think will make you money and once it’s sold you need to wait for settlement before you get paid. These are all vital to the success of the project.
Most of all, I need to know right up front who my potential buyer will be because what I do, should be targeted at them.
Articles get written such as the two links I’ve included here but the figures aren’t provided by me and based on what I’ve written above, it’s not the whole story.
'Phenomenal': House bought for $620,000 flipped for $1.408m four months later
1980s do-up nets investor quick $225,000 after mega-makeover