Flipping Builder - Do investors see value in a builder that specialises in flipping houses?

To provide some background - hubby is a builder and we build our own developments. Developments take time to turn around and work the whole way through and we don't have the resources to turn them around quick enough - so we have time on our hands between developments to work for clients. In this 'in between' period we take in a variety of jobs however most are large extensions, renovations or new builds. We are still trying to find our niche market that we want to focus on. An idea we have is to be a builder that specialises in facelifting houses so investors can flip - they source the property and we put in the elbow grease, we are based in Brisbane and the market is on the rise so we feel timing wise it is a smart decision. Our idea is to put together a comprehensive price list so investors can walk through a house and know how much the facelift will cost, the spec of materials etc. So basically we could work through the contract and have kitchens built, materials purchased, while waiting for settlement, once settlement happens we get in, get the job done professionally and quickly so it can be turned around for profit or for tenants for increased rent.

Does anyone see value in this service? or are most flippers DIY? Obviously we need to ensure we are providing a competitive priced product, our goal is to develop a pricing system and specifications so we spend less time shuffling paper and more time building and being productive.

 

Aka Cherie Barber?

 

The problem with "flipping" is the tax that is incurred - no CGT discount if a property is sold for a profit within 12 monthsowner would be subject to the full CGT liability.

Secondly, if a person does multiple flips then they will be classified as doing it in a business manner by the ATO so normal taxes will apply.

So flipping isn't so popular in Australia.

Perhaps you could still advertise yourselves as "cosmetic improvement specialists" though. This still has huge appeal and demand, for owner occupiers and investors alike.

 

Flipping works well in US because entry/exits costs far less, don't have stamp duty and CGT is only 15%, or you can avoid CGT is buying another property.

In Australia as OP mentioned high entry/exist costs involved may make it difficult to make decent profits, and if flipping in a flat/falling market becomes higher risk and if flipping in booming market, why would you bother, you will make money doing nothing and just holding.

MTR

 

Could not agree more, time has taught me many valuable lessons that last thing you mentioned is the most valuable from an investment sense.... Timing the market, then time in the market, flipping means too many people get a slice of your pie I.e entry/exit costs!
Keep it simple and let time do its thing.

From a building company point of view pick an area you love and stick to that for me it's heritage facade restoration, for you it could be architectural renovations to traditional Queenslanders?

 

aka dulux and cash labour

 

sounds like a good plan.

Forget the cgt and other implications that's the investor/owners problem! there would be people out there wanting to flip (and some may need to learn the hard way with the tax man and co) but there is money to be made you just need to (like anything) have a plan and good reliable trades would be a key part

as long as you know your numbers you should be able to walk through a house and have a ball park number, an inestor should also have a number they want to spend.

Talk to real estate agents and start going to opens of run down houses and see who the buyers are.

 

I think business name "Flipping Builder" is great too

I think it's an interesting business proposition but the pricing need to be competitive as otherwise, there's no stopping people to go with other builders

 

I think there would be a lot of demand for builders that specialise in investor type cosmetic renos. I recently posted asking for a selling houses australia type builder and found one who is currently renovating my entire my unit which will take 4 weeks before it goes on the market to sell. It's a property I've had for many years. We measured up before the tenants left then went through the day after for a check and started ordering and getting quotes. If this works out, I plan on using this same builder to refurbish my other rentals to improve rents and values. The builder needs to understand gaining maximum value from minimum cost, time is important, the job can't drag on and go above budget and they need to be good at communicating.

 

Yes I see value in it.

What about a service that is just quoting. For example I am about to buy a property that I wish to reno and onsell. You guys could come out for a quote and ideas before I enter the contact. That way I could determine if there is enough profit in it. If I then buy it you get the job of what you quoted on.

 

You need to buy very well to flip...like off market deals significantly below market value.. that is where the flippers make their money. Your profit it locked in when you buy and not relying on the market. CG is cream on the top if its made.

 

Am I missing something? I've had builders do that for me for free. OTOH if I kept asking the same builder to come out again and again they might get fed up and start charging.

 

No reason you can't buy to flip, there's all sorts of business plans you may work to.

 

Exactly.
Why would you pay someone to do this when you can just get quotes from builders

 

Agree.
Another consideration is ROI

 

I've had trouble getting quotes from builders when they know they may not get the work. Also it doesn't feel right wasting their time. I would pay for something like this.

 

Fair enough

Not sure why you would feel bad? We always get quotes for jobs and pick the best price etc that's just business and life.

I would not pay for this because this information is readily available, if subcontracting you get quotes from plumber, electrician, kitchen guy etc. and more than one quote.

If there was a demand for something like this why don't we see companies offering this service for a fee?

 

As terry is saying he may not go on to buy the property once the quotes come back. He would be using their expertise to help stack up the deal. you are paying for their time and I think that is fair. You are almost using them as a "consultant role" to provide their skilled input and feedback. Then if the deal stacks up and Terry buys, they still aren't guaranteed the work. The circumstances may change or time delays or a variety of things could happen