property finders and doing up property.

[fitboy]

Hey everyone

I've gotten to the point where my equity is at the level I like to keep it at but I still want to keep the ball rolling as a property invester. I'm looking at options that could help me raise cash so I can buy more investment property.
Time is the one thing I have a lot of, so I was thinking of either trying to become a property finder for a while or even do up a property. I was wondering if anybody out there is doing either of these things. If so, do you have any tips?
For those of you who are into doing up property, what are some things that I should know. If any body lives in chch who does this would like somebody to come along and work for free in exchange for your experience let me know.
Look forward to hearing your replys.

fitboy

[toby]

Hi,
I do both full time in the Hutt Valley.
There are masses of books around (Free at your local library) on optioning/flipping houses.
The most important thing is to know your market, I can't say that enough.
Everytime I have lost money it is because of that I didn't know the market.
You need to know which area you want to work in like the back of your hand and once you do you need to befriend an agent in every company.
The deals come direct. By the time they hit the papers there gone so you need to have a fantastic relationship with your agents.
I hung out with a guy in Auckland who flips a house a week! And makes $10-$20k a deal.
Try your local investors club ask Agents and if you don't find someone direct someone will know someone.
For flipping I'd suggest you find a money partner or 2nd tier finance, your odds of success will greatly increase as you have back up to settle if needed.
Tieing up houses on an extended out clause is done but I wouldn't base my business on it. Yes I've done it but even if it's a great deal and you don't flick it in time you run the risk of destroying your crediability if your buying through agents.
Hell I could spend 3hrs discussing this subject and some.
I'll just say one thing more and that is try creonline.com and american sites they have heaps of free reports.
Good luck.

[fudosan]

Hi toby,

Can you share with us some tips and techniques you have learned in flipping properties? How long does it usually take to flip a property? What kind of work do you do before putting the property back on the market?

[orion]

Hi Toby, welcome to the Forum!!
Great to see you doing some posts.

Regards
Graeme Fowler

[fitboy]

Hey Toby

Graham always talks about the importance of rules, which I've have established as an invester but not yet in these areas. Do you have rules and if so what are they?

See ya

fitboy

[toby]

Hi all,
when it comes to flipping there's two types - Wholesaling and retailing.
Wholesaling is generally when you buy well, well below true maket value normally you'd flick it for a price that an investor would pay as is where is to a cash buyer (NOT to someone who will tie it up and flick it on again) I generally do this by private sale - best if you have a data base.
Retailing is when you renovate and sell on for full market value.
I have found that I really don't have the personality to deal with selling houses retail so I use Agents, two reasons 1. They have lots of dummies who will pay lots for the property and secondly currently the private sale market is not huge and not that many people look in papers unless there after a deal. I have friends who do sell successfully privately retailing but it can take time.
As I said I know a guy who will buy a house for say $170k from a general listing and sell it just below market say $190k on an exclusive, week in week out - that's his niche.
Speed is everything.
My rules for flipping are I only go unconditional or make a cash offer if the deal would sell any day or night.
If I don't want to put myself at risk I tie the property up for as long as I can get. This may be challanging in a hot market so I'd suggest you find either second tier funds like a lawyers nominee account or bridging finance or get someone to put up the money if you need to settle.
People in the USA offer their investors upward of 12% + fees + break costs.
Buying privately you can negoitate better terms.
Buying through agents you really need to beable to settle to beable to consistently get good deals - People obviously don't like you mucking them about and remember Agents only get paid when you buy.
So far as the time you want to stick to retailing in the middle of the market or low end for best speed- having said that if you can tie up a 1 mil house and make $100k go for it but I wouldn't put my balls on the line.
With the work side you want to do as little as possible on wholesaling maybe you might mow the lawn, slap some paint on the front door, fix the letter box up, stop the leaking tap- just make it look ok.
Retailing comes down to where you're working in the market, the higher end obviously needs better quality fittings and carpet etc.
Remember you're selling the houses not moving in yourself.
So far as time anything from one day for a wholesale deal to in this market six weeks for retailing.
Hope that helps.
Regards - Toby

[Jeanene]

how does it work with tax on this though?

Sounds like a great plan
do you have to pay any kind of tax if you are flipping every week?
are you classified as a developer?

[Shoshin]

Flipping would be a great way to really find out more about your market and as toby says because you have such a good relationship with the agents when you saw one that suited your personal need you could keep for yourself.

[orion]

do you have to pay any kind of tax if you are flipping every week?
are you classified as a developer?

It is always taxable if your intent is to buy, then sell on shortly thereafter - if you make a profit.

Regards
Graeme Fowler