Anyone watch Aussie Property Flippers last night?

The Aussie Property Flippers - Yahoo7

I really enjoyed it, I found it didn't glam up renovating and it showed how easy it can be for budgets to be blown, It also had comments like "We need to remember this is to flip, not for us to own".

Overall I thought it was a good show

 

Despite nonsense valuations and omitting or ignoring buy/sell/hold costs?

 

The apartment guys were very inconsiderate and careless. E.g. drive scissor lift into building, remove tiles with electric tools on a public holiday.

The house couple seemed quite competent.

 

The omission of holding tax and transaction costs in/out is a huge misrepresentation IMO. All these shows do it except some UK shows.

Some of these renos can also be so substantial a GST issue occurs and treats the property as a taxable supply of new residential premises. Even the very issue of income tax will remove 40% or more of the profit from reinvestment into the next but the reality is you cannot reinvest into the next as you already need to have bought the second to avoid a two month hiatus....Turnaround time takes a minimum of 100 days and it would be rare that its that. So you are lucky to do three a year. Very lucky. Throw in council approval and you are in real trouble with timing...Sometimes a new or revised deck needs approval. You never hear about council approvals on any reno show even when the place is gutted. But it is a requirement - They just dont tell you. Exempt developments are very small projects within specific parameters. Exempt Development | NSW Planning portal

In many cases they do reinvest profits then complain they have no cash to pay the taxes and the PAYG instalments which inevitably follow the next year. Throw land tax in perhaps and allow for two or three in the team to share the profit and its not easy. Often there is no cash its just paper profits. So they complain about taxes when they cant see or feel the cash profits. I give credit to anyone who can sustain that pace and still make profits. One loss can destroy the plans for the next when it sucks all your cash out.

Reno's arent like winning lotto. They are a financial committment, hard work and a risk. Done well they can produce a profit. But a replacement full time income.....VERY hard to do. If it was that easy everyone would do it.

 

I thought the flat couple were idiots. The bathrooms were completely non complaint to waterproofing and building code/standards, very poor quality workmanship. Val was a croc. The valuer should be sacked if the bank are going to value it that much higher after a poor cosmetic Reno! Older couple seemed to do a good job and know their stuff. I literally laughed out loud when I heard the young couple say they quit their jobs and have made 150k flipping in the past two years! To quit your day job to earn 75k a year between them flipping is ridiculous. No money in that!

 

They seemed really dumb- 4 hours spent carrying up timber and plaster.
instead of forking out for the scissor lift from the beginning? Body corp/building manager wouldn't be impressed with the mess and disorganisation.

 

Yep. I just did waterproofing of a new ensuite under very strict supervision from a licenced plumber. By the time I finished it looked like a smurf exploded in there!


This is the actual colour which for some reason didn't come through in the main photos

 

I would really like to know though, what suburb can you buy something 500k below market value? That is what the house flippers did. Everywhere I look you only save 100-200k less for a complete dump in Melbourne. After bringing it up to standard with the other houses the reno costs would make it almost the same.
By this i mean:
renovated (poor quality but still)
9 Goodman Street Brunswick Vic 3056 - House for Sale #125128978 - realestate.com.au

unrenovated: next door neighbour
56 Alexandra Parade Clifton Hill Vic 3068 - House for Sale #125311882 - realestate.com.au

both priced the same.

 

I question if sometimes these brags are actually a deal cut with the owner for a share of the reno profit and they forget to say this. This a ploy to avoid stamp duty, income tax and even land tax. I did get approached by someone who used to do this. He would approach run down owners seeking to sell (often distressed). He would do a deal to pay their loan arrears and finance and do the reno. He took a large % of the "profit". Owner got balance. Took a caveat and released it when property was sold. He handled the selling agent. The owner was the seller. His name was on nothing. He told the owner it was tax free.

I reckon it was tax evasion and didnt want to assist. He didnt want to pay tax - He wanted to claim a deduction and GST on his costs though. Dodgy.

 

Sounds like it wasn't too far off from being a plausible strategy? Or was the tax that he ought to have been paying been a deal breaker as well?

 

Have to compare sales prices vs listing prices but then the run down dump will probably sell for more than the half arsed renovation.

 

Yeah I agree. Still don't think you can but anywhere for 850k, do a good cosmetic reno and sell for 1.3mil though.

 

Overall I enjoyed the show primarily because it started with the reno & finished with the sale all in the one episode (no to be continued on Sunday, Monday etc.)

But also left out of the profit equation was the effect of organic Capital Growth from a rising market (especially in Sydney, not sure on the GC) over the 4 month (14-15 weeks) period of the reno.

 

It would be tough in that timeframe. I have sourced lower end properties where it may have been able to be done with less profit margin of course. But these take a long time to locate. 12 to 18 months minimum in my experience. Then if the market is hot there is a lot of competition. One property that was a potential candidate for a flip was on the market 2 days and had 18 offers at the first home open. Right there you can kiss your profit margin goodbuy.

 

I agree. We bought our IP last year, and the same houses as ours had 100-150 growth. in 9 months almost 200k growth (all commission homes so very comparable as same floor plans, comparable block sizes, never renovated etc). I think its all about timing.

 

These were basically my thoughts - I found it pretty unrealistic. These sorts of shows always downplay the difficulty of flipping property, and I'm sure they suck inexperienced people into thinking it's easy money.

 

I did not watch the show, but seriously why would you bother flipping in Australia if you are buying in a boom market, no point

 

Find this one hard to believe, $500K under market value

 

whoops, i posted the wrong links!
meant to be these two neighbouring properties

56 Alexandra Parade Clifton Hill Vic 3068 - House for Sale #125311882 - realestate.com.au

58 Alexandra Parade Clifton Hill Vic 3068 - House for Sale #125311618 - realestate.com.au

 

Wife and I lolled at that

Same, none of this baiting to watch next week, it started and it finished, if we miss next week we don't miss this weeks result .