financial information, sort of

Hello. While most people on here are not licensed to give financial advice I guess, but my inquiry is more general in nature. I am getting older now and time is running out. I am interested in renovating and flipping and there are many people doing just that, however, I can't get a loan unless I have a job to pay it back. How do all these people who flip manage to do it full time, if that's what they do and go from property to property and still have a full time job? and if they don't have full time jobs then how do they manage to get loans to go from house to house? As a foot note I would be possibly interested in a JV agreement. Thanks

 

Your question does not involve the purchase or sale of financial product (life insurance or managed funds) so a financial product advice license is not required.

If the guys who do it have a track record they are classed as a business and the income from the business is considered in the loan application. If you are starting out you work very hard and manage both the day job and night job.

 

Its hard to make a profit doing flips consistently. It costs too much entering, exiting and in tax.
Not to say it cant be done, but its not as easy as the TV shows make it seem.

Time is running out for what? How old are you?

Blacky

 

Hello Blacky. Thanks for your reply. I'm 65 and still working. in 2011 I went to Cherie barber's course and got a lot out of it. I have an investment house in Townsville which the bank half owns. I renovated it according to what I learnt and the agent at the time said it was one of the nicest renos he's seen. I want to bounce of that house to the next one, hopefully

 

I think the shows are rot.......they are getting financial support from sponsors or the network etc, plus if your watching the us shows they have diff tax to us.

I have done a few places up with basic cosmetics, not to sell, but basically work more than full time and do renos in between, so basically no down time, it is work, work, work......like Rhianna or 5th harmony but far less attractive ☺

 

Hello. I have met with Cherie several times and she is a very nice lady and genuine but she can't help everyone. I agree the US markets are different to here and I watch the reno shows for entertainment value only, sometimes a good idea comes from them. I don't intend to invest there. I realise it's a lot of work as well. The house I have in Townsville was completely renovated over the phone. I'm trying to figure out how to move now fairly quickly and do what you were/are doing

 

I can't think of any way to do it beside have a income stream and then spend the time doing the hard labour......unless of course your income stream overcomes the costs & covers you to live etc....

 

Yes, you would need to make sure your theory works by selling at an expected price. Good point.

Steve, sometimes people will blow smoke up you know where instead of being blunt and honest, you have to know for yourself that what you can do will actually work $ wise, is quite a bit to sit down and think about. Then it is your call to put it into practice and run the risks.

What are your plans with the one you have done ?

 

Hello. I haven't sold the house in Townsville because I was advised to keep it. The Ardani coal mine there is starting up and it will be be apparently the biggest one in Australia, also the new entertainment precinct will begin construction soon. I would love to get my hands dirty and do flipping full time but in my situation I am trying to figure out how to do it. It's difficult to find a financial planner who is also a property investor

 

Hello Rolf. Thanks for your reply and you are darn right. IT IS a barrier for me and I would love to do more than 1 at a time. The traditional way is to go to the bank tell them you have a job and you can pay them back and they'll give you a loan for 30 years. I am not very financial savvy when it comes to getting loans or locs in order to do renos on a regular basis, but there are people doing it full time or at least regularly. I need to know now is the how?

 

Steve, it really depends on how much cash you have. I don't need to apply for finance to buy, renovate & sell properties. I can do it all with cash... but, the actual return on investment is better if I do borrow money. If you were to sell your Townsville property, how much cash would you have to play with? There are other ways to borrow money rather than banks. You mention a JV, which is a great idea with the right partner. There are private lenders and other non-traditional lending avenues.

Probably the biggest lesson I have learnt by doing renos, is the profit percentage point. Lets say we shoot for 30% profit. On a $400k property you would be targeting a gross profit of $120K. But if you can manage to buy & flip a $1M property for the same 30% margin, the overall gross profit is $300k.

Of course how much actual 'physical' work you personally do will determine your real income (as you need to pay yourself). But when you approach a lender whether private or institutional, your overall strategy and (equity) you put into the deal will determine whether you get the funding.

Also, there is no harm in being turned away a few times, as this will help you devise your application strategy and structure a more workable deal. Keep applying till someone says yes....and someone will say yes if the deal is good!

 

Start by working with a broker.

You may have to sell everything up first to be able to get the funds, but then you still have the problem of no full time income, so no normal lender will look at this.

So step one is to get a reliable income stream, PAYG job would be best as it takes less time for it to be recognised, if you start a business, it will require tax returns showing income and they may ask for more than 1 year.

And you have to aslo decide, are you buying doing reno then holding (as per the one you now want to keep) or are you buying doing reno and selling. You can mix them, but as you know now your money is stuck in the place your holding.

Good luck, all these things take time unless you have a large cash base.

 

Hello Dabbler. I do have a PAYG job and I would like to do several renos per year possibly using the house in Townsville (which is half owned by the bank) I was looking at Goulburn as I can get there in 2 hours and some of the work I can do myself on days off. Thanks

 

Hello Knights of Ni. I don't have a lot of cash, probably about 180,000 if I sell up in Townsville. It might be better though to keep that one and use the equity from it including a bank loan of some sort to go to the next property. A partnership WOULD be a good idea with the right person. Your profit example is spot on and I would be capable of doing some of the work myself e.g. painting, tearing up carpet and other jobs provided the property wasn't too far away. I went to the Commonwealth bank today to make a general inquiry and she wasn't much help. So I'm trying to think outside the square

 

Extra income would be good, I got the thinking that there was no job due to info in the first post.

If there is a steady job, income from the IP & equity, then you *may* be able to do something, but yeah, you better get some advice and talk to a decent broker, you will get asked what your plan is too, so better really sit and try and nut that out, is it buy and hold, is it buy and then sell after reno, or a combo, but you will need to have a plan that is plausible for those who work in the lending area.

There is no substitute for reading, you should already have a decent sort of life experience, make sure you know 100% that your work you did actually improves your position, so far you really do not seem to know what your reno you did means dollars wise if you went to sell, theory and practice can sometimes be quite far apart, in other words, no point doing a reno, even if your own labour, if you will end up breaking even or losing money.

You probably can see, I think this is quite hard to do as well as a lot of time consuming hard work, but you probably are like me in that thinking it is a good use of time vs say hanging around a pub etc....