Flipping in 2010 (New Zealand Style)

[Bluekiwi]

Would be delighted if people could tell us what flips they have done this year and how they went.

The usual details on how much the property cost, what they did to the house, how much it cost and how long it took.
What they sold it for and what the nett profit or loss was.

The original plan and what they actually ended up doing.
And what problems they came accross along the way and how they solved them.

Sort of like a Homes under the Hammer, or Flip this House, New Zealand version.

[drelly]

Guide to 2010 Property Trading
=========================
1. Attend seminar
2. Buy house at amazing bargain price from seminar speaker
3. Renovate house using no more than 5L of second-hand paint, 3 nails and a new tap
4. Put up sign made by 12 year old niece who is very good at art
5. Wait for buyers to flood in
6. Extend home mortgage
7. Sell for $50k loss

[ENP]

Does this technique work in a falling market?

[ENP]

Guide to 2010 Property Trading
=========================
1. Attend seminar
2. Buy house at amazing bargain price from seminar speaker
3. Renovate house using no more than 5L of second-hand paint, 3 nails and a new tap
4. Put up sign made by 12 year old niece who is very good at art
5. Wait for buyers to flood in
6. Extend home mortgage
7. Sell for $50k loss

Surely some people must make some money out of this strategy?

[drelly]

I think you'd have to use a 4th nail to make money.

[ENP]

I think you'd have to use a 4th nail to make money.

Drelly.

You have obviously been around the block a few times more than me. So you know a lot more about investment than I do. Can I ask you and others here on PT which techniques work in a stagnant/falling market like today where yields are quite low for the long term buy/hold investor types.

Just wait...? Or take action?

[drelly]

Actually, I think now is a great time to buy for long term holds. There's much better yields around than there was a couple of years ago. Don't be fooled into thinking that you can rapidly expand a buy and hold portfolio like so many did during the boom. Without those massive annual capital gains, it's very hard to do without developing or trading your way ahead. Be patient and buy low, buy quality, buy on yields at pp or after reno of 8%+.

I've only done one trade, so the best advice I can give someone in this climate who wants to do it is to start with a big fat margin and sell fast.

[graemeh]

Surely some people must make some money out of this strategy?

Yes, the seminar presenter

[ENP]

buy on yields at pp or after reno of 8%+.

Do you put in cash deposits for 8% yields or 100% finance?

If you don't mind me asking... where are you buying? Cities/towns I mean. In Whangarei?

[AMR]

:P Love your sense of humour Drelly!

I went to a block of flats in Kingsland last weekend which were being flipped. The developer looks like they may make 70k gross on each flat. They bought at 200k each approximately. Would have done well regardless of whether they employed a buy and hold strategy or a flip because they bought so cheaply. So anything works if you buy it cheap...

[drelly]

Do you put in cash deposits for 8% yields or 100% finance?
If you don't mind me asking... where are you buying? Cities/towns I mean. In Whangarei?

I didn't put in deposits but that was because of the huge capital gains. However, I've pumped a lot of my own money into them since. I'm not buying right now as we have a baby now and my wife stopped work but I would be if things were different. I've bought mainly in Whangarei. Smaller towns are more vulnerable. I have a couple of places in Paihia that are a pain in the neck if they go empty during winter. You'd have the same issue with any small town that relies on one or two industries to do well.

[whitt]

Read property cycle book by K Trass. it mentions a few things you can do during a slump.

I found by accident and next cycle around I am going to plan the following. End of boom clear any lemons and spend those last few years doing maintenance. That will give me a robust portfolio to withstand any impending slump. Some people buy more property but when the slump happens the value gets wiped out back to that of many years earlier

I am yet to formulate a good slump strategy yet and most likely will not until it is over. Buying quality stock in good areas at bottom slump is most likely to be beneficial. This means you are buying at discount in an area which would be first to gain growth during a recovery. Houses in lower socio suburbs move much later during a recovery than quality areas.

[Dean@Massiveaction]

Hey Whitt I agree but I would clear out the lemons mid slump, even early to avoid an unexpected end to it :-).

[cube]

Maybe if you got a 12 year old who wasn't good at art, you'd get a better result.

And surely you'd have to use 2 nails, not 4, to make money.

[mortgage broker]

Guide to 2010 Property Trading
=========================
1. Attend seminar
2. Buy house at amazing bargain price from seminar speaker
3. Renovate house using no more than 5L of second-hand paint, 3 nails and a new tap
4. Put up sign made by 12 year old niece who is very good at art
5. Wait for buyers to flood in
6. Extend home mortgage
7. Sell for $50k loss

drelly, do you really think steps 3, 4 & 5 are necessary?