Australian Property Floppers

Anyone watch this show?

Most of the time it shows some couple buying a house in Melbourne or Sydney for 900-1million with the goal to make 50k out of it.Seems like absolute madness to me and if you get caught out with a turn in the market you are cooked. A lot of the time they walk away with about 20k (well so the show sais)

Last night a couple did quite well buying an apartment for 330k and selling for 442 on what appeared to be the sunny coast. The show said they made 90k profit after spending 15k. Hats off to them, just go's to show that flipping is possible if you pick the right area. What most people fail to realise is that the right area is most likely not one where the market is booming.

One thing that annoys me is that the show lies about the profits made. Do the maths on that deal and there max profit would of been about $72k. Still nothing to sneeze at however

 

Yes, saw this.

But you don't want to be flipping in a slow or falling market that is suicide.

I like rising markets because without fail you will make money, but also you would not even bother renovating because you will make money regardless, why work that hard. In fact you are better off holding if it continues to rise, then you make more money.

I guess a market like QLD you need to buy under market value, unless of course it has just started rising. All costs should be included, I wonder with these shows whether that is the case?

 

Bearing in mind that $42.5K of this was due to organic market growth and not the reno (since comps for renovated property were $400K at the time of purchase with an end sales price of $442.5K). Slim margins for such a risk IMO.

 

With the in and out costs I cant see how it is feasible?

As MTR said it will only work in a rising market and in that case why spend time and money on a reno if most or all of the growth is organic anyway?

 

I have to disagree with the above view points

The idea of flipping is to renno and sell. Not to hold for organic growth
In a rising/ hot market you can easily pay too much for a property because unrenovated properties dont attract much of a discount .
In a slow market only the well presented properties will sell and hence you can buy unrenovated at a very discounted price.
Do it up, advertise it at an attractive price and it well sell quickly, regardless of slow market.

Have a friend who made 110k in a 3 month renno in geelong a few years back. Bought in a sluggish market for circa 220 and sold for 370

Not possible in a heated market as the unrennovated property would sell for say 350 and the rennovated only 400

 

The Aussie Property Flippers on PLUS7

 

They did say that but i reckon they were underestimating their sales target so they didnt look like dicks on tv
Do you really think the apartmrnt market on the sunny coast with no water view moved 10% in a couple of months?
I thought there choice of an apartment was risky but its possible these two are smarter than they look. Aiming for a 10% gain on a 330k property isnt that crazy risky. Unlike the people that buy for 900 and aim for 5%
Will be interested to see if they are in another episode

 

They say they include all.costs but last nights call of 90k profit on a 330 purchase and 442 sell is simply not possible
The 90k was called by the shows presenter

 

Perhaps confusion, they originally got a higher offer, but they did not get finance? I thought the value probably did not come in

 

not sure about that particular sale but it is possible in the right time and market.

but I have bought and sold in Melbourne mid to late 2000s

395K sold 530K in a space of 9 months
410K sold 595K in a space of 6 months

 

I dont think its even $72k

Rough estimates (I dint watch the show)
Buy $330k
Buying costs (5%) $15,000
Reno costs - $15,000
Interest holding costs ($265k @ 4.5% for 12months) - $12,000
Other holding costs - $2000
Total costs $374,000
Sell price $442,000
Less selling costs (3%) $13,000
Net selling $429,000
Net profit $55,000
Tax (30%) $16,500

Actual profit $38,500

Sure, not bad if you are starting out, but massive risk involved for a 10% ROI.

 

The stamp duty can be a killer.
I also a friend who does the high end stuff and makes a nice living from this, but more risk of course, ie holding costs, market can turn, smaller pool of buyers

 

Timeframe (ROI) important, was it 4 weeks from beginning to end? If so, perhaps do 5 per year and you could be doing OK??

Still also dependent on market conditions, IMO it can also go pear shaped if you get this one wrong and you will have to hold the property. Just my thoughts.

 

Know of people that do this. They purchase higher end property as PPOR and renovate and sell. If you get the timing right can make big bucks as premium properties always seem to rise last and fall first.

Even know of a tradey who does this with cash he has done so well so no need for bank finance.

Good time in Perth maybe for this exact strategy resources permitting?

 

I have posted this before on PC, my g/friend paid I think just over $1M, someone got RP Data and sold it for around $3M, that was when the share market crashed in 2008, she got a good price. This property was extended, had to go via council for this. Then the buyers sold it for considerably less $2.5M? what a difference a boom/bust cycle can make.

Not sure what she spent, perhaps $600K-800K don't know?? forgot so long ago now


25 Almondbury Road, Mount Lawley, WA 6050 - Property Details

 

My only thought was watching that show was, geez they'd would want to have all their taxes up to date and in order spouting some of those numbers on national tv.

 

Like someone said...Timing is everything.....This is why I like the property market naysayers, throwing their hands up telling everyone who will listen ....The market bubble is about to burst etc etc. These people are normally the ones who have missed out or don't have the nerve to take the plunge.

In my experience there's money to be made in all markets....On the way up & down (thanks to those who panic )

 

Why did you include tax on your profit calc?

I hate it when people use tax as a reason to talk someone elses deal/ profit down

Is your income tax free??

Also.i would estimate the holding time was 3-4 months, not 12

 

Well thats where the skill is involved i guess

Dont buy on a downturn.....
Same risk as a buy and hold investor really

Upside is they can make money in a flat market if need be