Is anyone else still successfully flipping or am I insane?

Partner and I have build a few houses in new estates, moved in, lived in for a year and then sold and made decent profit each time.

I want to keep going, but he is keen to explore long term investments and build a portfolio.

Am I playing with fire here? I don't want to wait years. I'm happy to build, make my profit in a yr to 2 max and then move on.

Is anyone else doing this?

 

Suicide in this market is my personal opinion.

I was doing flips years ago in perth, and it was all beer and skittles.
Then the market turned, right when personal circumstances were wrong, and we were stuck.
We got out of it, but not without losing basically everything we had made in the preceding few years.

Flipping is a hard game to be successful with. Purchase costs (stamp duty) of 5%. Exit costs of 3%, plus interest costs means you need 10% increase in Val to be break even.
Add in Reno costs, holding costs and tax, and the margins are skinny at best.
Add in a 5% decrease in market value, and your really up against it to turn a profit.

If you can make it work - all the best to you.
We could, until we couldn’t - and this market is looking worse than Perth was in 2010.

Blacky

 

Blacky did you flip old existing properties via renovation/holding or were you investing in new estates and building new homes?

 

Transaction cost too high in properties for flipping, you need rising market
Flipping shares is cheaper

 

How much od the profit you made was because the market was rising? Is this still the case?

 

Playing with fire in the estates of Syd and Melb this year.

I prefer slow flip investments which tend to look like this over about 2-3 yrs:
Buy>reno>rent>DA for dual occ or subdivision>build>sell half>keep half

just enough profit to survive and exit flat markets if required - structured to benefit most from even 5-10% market gains as 2 dwellings at the end.

 

CoreLogic’s latest Property Flipping Report reveals 93.7 per cent of Melbourne homes flipped within one to two years of purchase in 2017 earned more than their owners paid for them.

The proportion for properties flipped within a year of being bought was 92.6 per cent.

The Mornington Peninsula had the state’s highest proportion of profitmaking flips at 98.2 per cent.

 

I would go against the grain here and say flipping is the better option in Sydney and Melbourne provided you are buying in an area that has solid demand and you can come out ahead after land + build cost. Don’t rely on capital gains because there won’t be much if any but if the deal stacks up without it then it could work.

Starting to build a long term portfolio now is not the right option. There will be a good 5-10 years of nothing ahead. You’re just subsidising your tenants lifestyle while they put wear and tear on your property. Better to keep the money in the bank or offset and get in when the conditions improve.

The tectonic plates of property investing in this country have shifted massively. Need to wait and see when a trend emerges again before jumping in.

 

There have been a few people we have come across who have been caught out doing this in Sydney and surrounds...

Some purchased land and unable to settle - due to lending tightening and also life circumstances changing at the same time, unable to settle the land, and hence they are likely to loose the deposit

Others went on to do full construction, and unable to sell these properties

 

If you get caught by the ATO they could amend a few years by denying the main residence exemption and hit you up with GST on each sale on top if they are new builds. Renos are easier to argue that the reasons for doing the reno are personal and for own home and no GST. Reduced detection risk too. New builds are easier to argue as a flip and get caught in ATO data matching.

You have claimed the main residence exemption in each years tax return ? Not just disregarded it ?

Read Item 18. In tax return.
Did you have a CGT event (Y/N)
Did you claim an exemption (Y/N)
Enter code for exemption (Box)

Easily overlooked. And as it fraud / evasion there is no time limit anyway.