For the latest episode of this bonus series of the property investing journey, Mike is joined once again by Henny Stier, co-founder and Principal Buyer’s Agent for OH Property Group, to talk about the risks and rewards of flipping property for profit. This conversation follows on from the previous podcast where Henny and Mike discussed the reality of property renovation and some of the common mistakes that people encounter when they set out to flip houses.
In this discussion, Mike and Henny dig a little deeper into some of the risks that investors should be aware of before embarking on a renovation project and consider the likelihood of turning a profit in a market that’s arguably peaked around the country. Henny shares the secrets of successful flipping and explains the impact of market forces such as rising interest rates and escalating construction costs.
Using the example of buying and renovating on a busy road, Henny talks through the potential for over-capitalising and explains why certain types of properties and locations have a price ceiling.
Mike draws Henny on the benefits of engaging a Buyer’s Agent and talks to the multitude of insights they can provide, such as proximity to the market, getting an innate feel for value, building relationships with agents and more.
One of the bigger risks with any capital venture is always around compliance and Henny and Mike spend some valuable time drilling into the ATO perspective on capital proceeds from property renovations. With useful examples and clear language, Henny provides straightforward commentary on the CGT implications and how to take them into account.
Henny and Mike wrap up the conversation by noting that profits generated in a booming property market need to be differentiated from those that are attributed solely to the upgrade works. It’s easy to think that a capital uplift is due to a well-done reno, when in reality the price would have lifted regardless.
With some home truths around renovation and invaluable advice on property flipping, this conversation is a must-listen for any aspiring property investor.
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Mike is joined once again by Henny Stier, co-founder and Principal Buyer’s Agent for OH Property Group, to talk about the risks and rewards of flipping property for profit. This conversation follows on from the previous podcast where Henny and Mike discussed the reality of property renovation and some of the common mistakes that people encounter when they set out to flip houses.
What we cover in this episode
- The triple D’s of buying well
- Avoiding over-capitalisation
- How to get access to the best deals
- Understanding the risks in flipping
- The ATO position on capital gain
- The case for flipping – for and against
“Buying well is really key to a successful flip because if you buy under market you’re already halfway there” Henny 1:38
“A lot of agents do very well out of flipping properties because they can spot a good buy from a mile away and they are usually the first at the door to try and buy that property” Henny 4:31
“If the stars are aligned, if you buy at the bottom and then you sell when the market’s going up, it’s much easier to ride that wave but if you’re in a climate with interest rates going up, building construction costs delays – I ordered a fridge in January and it was supposed to come this month and I’ve just been told it’s arriving in January next year” Henny 8:11
“The secret of people who are successful at flipping, they’re the ones who were able to read that market and read the sentiment of the broader population and understand what is a good flip, when is good flip” Henny 8:52
“It’s miscalculating timing, miscalculating costs, and a lot of people actually are doing this as a side hobby but you do need to be quite a sophisticated investor to do flipping well and I do think you have a definite advantage if you have the real estate background or a trades background” Henny 15:40
“It’s hard to sort of quantify that right how much of it is market growth and how much of it is actually the value that you’ve manufactured in the value that you’ve added” Henny 20:25
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