joint venture's and money partner's

i think the most important is finding the good deal and having sufficient funds. doing flips is very different to buying and hold and minor comestic reno. you need to have liquid funds to fix issues or problems as well as time is always an important factor to determining whether you can make a gain

in the early 2003-2012 i probably did more than 10 buy reno, dual occupancies and sells (after 1 year hold to get the discounts). Margins was around 50-200K mark each it is not easy and would not prefer to do it. i only did one joint venture with a cousin of mine which actually led to lots of arguments as certain styles might suit one and renovations designs etc. I prefer to do it alone. i was in the API mag in 2010 for adding bedrooms etc and had my figuers on profit margins etc.

i think it is really hard to make a margin using this flips you better off doing a really expensive one as it is time intensive and you really have to prepare hard as to how to main a gain. You should watch the US series "flip or flop" on channel 9 there are based on a couple who are RE agents who have successfully sold properties but also failed on some attempts. There is also an article on a interior designer in melbourne in "insideout" magazine this month who bought a weatherboard 660K townhouse in richmond in 2013 and sold it for 1.4+ mil like last year. These are the upper end of the renos and sells which basically was 400K in construction and renovation costs. As properties are more expensive compared to the early 2000s, you should try to aim for 100K capital gain or more to make it worthwhile. that richmond example is a very good example of a flip 400K gain in 1.5 years in the owners pocket (also taking into account the boom that happenned those years)

 

Hey all
Follow up on progress
Since we’ll g the house I did the first Reno on
We have maneged to secure another 5 more deals since jointing results mentoring and only got one bank loan
First deal was a ppor bought 250 on the market 440-460
Second 283 pp 3k Reno sold for 350
Third 280 pp 47k Reno sold 442
Fourth 280 pp 55k Reno soon to go market
Fifth 250 pp 60k estimated Reno 450 estimated selling price about to start this project this coming week

Have learnt a lot , grown a lot , made some mistakes and can only grow from the mistakes

Daniel

 

@the world is your oyster Great stuff!
Curious to know, how much of the increased value is due to market movement vs value add from yourself?

 

Deal 2 sold 3 months after buy
Deal 3 sold 1 month after
Yes it has helped some but there was allways a profit if u sold the same day I don’t rely on cg as a stratergy it’s a bonus

 

@the world is your oyster what cities were these in?

what suburbs were these in? Well done

 

Western suburbs melbourne

 

Good on you for taking action and learning lessons from experience.

 

Great work, @the world is your oyster , you must be really pleased with the results and the money pile you have built for yourself . Do you plan to keep any at some stage and release equity as opposed to sell ?

 

Sounds like it is going well, sounds like you need to turn them over, do you hold any ?

 

Great to see a follow up post with some great progress.

In line with the original post, I've been drafting a lot of joint venture/development agreements lately with:

1. existing mum and dad landowner contribute the land and a developer carries out the development with profit sharing at the end; or
   
   
2. funding partner provides the equity and developer carries out the development with profit sharing at the end.

These agreements are pretty detailed and typically take 2 - 6 weeks to negotiate between lawyers and clients.

 

Great work @the world is your oyster

I'm curious whether you had the same funding partner for all the deals or different ones? How did you find the partner/s and structure the deals?

 

Hi jac hope ur well
We do plan to do so my borrowing ability isn’t that great atm mainly due to the poor qld deal I have
We are in the process of selling our ppor to allow more boring ability and possibly look to hold
But are also looking to build a cash buffer by flipping for a short term why we don’t have kids etc it seems to look to be a good idea to flip build the cash and in short term then look to some more passive investing not all active investing

 

I have only done one full jv deal where they got the loan and pay all costs I just do all the organisations etc that is my auntie so there isn’t much in the way of paper work done I no worries there is stil a lot of risk and some May not do that but it has gone really well so far

I have had to borrow chunks of money to pay for expenses and there are loan agreements used there

I have learnt a lot in the last year I have been advised to use lawyers to draft up copies of early access clauses and even get them to do the section 32 , I have always gone the cheaper option and used a conveyancer but some
Of the deals have been more tricky then I thought and I will be engaging a property lawyer moving forward I have left on the table by not having things written properly

 

That’s what sort of thing I will be needing moving forward
Are you in vic ?

 

I'm located in Brisbane but JV agreements aren't State specific so I can draft them for Vic as well.

They can take a longggg time to negotiate. Finally got one signed up yesterday that I had been negotiating for over 6 months. Then again, they can be quick as well. I have another one that is being signed on Monday that we've negotiated in just over two weeks.

If you're purely just providing development management services, you can also structure it as a development management agreement instead of a joint venture/development agreement. Generally the developer will have much less control with a development management agreement but also less risk.

 

Without a proven track record what is your plan to attract a 'money partner' to begin with?

Flipping properties is difficult to make a profit at the best of times, with this, a money partner is going to want more than bank 4% rates for lending you their money. So in saying that, a money partner will diminish your returns in an already difficult venture even more.

I feel that unless your are already a pro at sourcing super profitable deals you will have your back to the wall with this type of enterprise..

I am excited to hear your progression and really hope you do well from this.

 

Hi mate, thanks for sharing your progress. I find it motivating as I'm looking to do the same shortly. Any updates since this post?

 

Hi there
Yeah I bought another one
345 k
80k Reno
511 sale
45 day Reno

This one I done a jv woth the land owner
They received 345 at settlement, I paid the Reno and selling agent fees
No stamp duty was paid
No interest was paid

Done a heap of travelling since going to start looking again

 

Hi mate,

Loved the post! Interested to see where you are nowadays?

I am a builder myself and am looking at getting into flipping full time after doing a few over the years. But am strapped for cash so JV partners would be the most viable option.

Any tips?