HIS last property sale earned him a tidy million-dollar profit, so it’s safe to say when it comes to “flipping”, Tom Hall knows his stuff.
The Melbourne man has been flipping property for 16 years, and has 10 successful “flips” under his toolbelt.
For the uninitiated, flipping refers to profiting from real estate, either by “buying low and selling high” or buying a run-down home and renovating it for profit.
Mr Hall, a former electrician and real estate agent, ventured into the world of flipping when he bought his first property at 24 for $124,000, renovating it before and after work and on weekends.
He more than doubled that investment when he sold it a couple of years later for $265,000 after shelling out just $14,000 in renovations – and his love affair with flipping began.
Knowing he was onto a winning formula, Mr Hall went on to purchase bigger, more expensive properties each time, culminating in the most recent sale of a Brighton property which he bought for $1.35 million, and sold for $2.35 million 18 months later.
In the early days, Mr Hall and his wife Alicia used to brave the “dust and dirt” and live in each property during the renovations.
With two young boys, that’s no longer possible, but today Mr Hall runs his own renovation business, Overhall Your Property, alongside his flipping passion.
“I’m a visual person and to see the property go from nothing to something amazing gives me a thrill,” he said.
“It can be a bit stressful – it never stops and it’s very consuming.
“But I wouldn’t have it any other way. I wouldn’t want to do anything else.”
Mr Hall said a successful flip came down to meticulous market research and the ability to do most projects yourself.
But is flipping always a sure-fire cash-cow?
New analysis from CoreLogic revealed 90 per cent of flipped properties sold last year made a profit – but as house prices ease in Melbourne and Sydney this year, a rise in loss-making flipped properties is expected.
“Although the proportion of flips at a loss has declined from recent highs in 2009 and again in 2012, there has been a clear increase in loss-making flips recently,” CoreLogic’s Property Flipping Report stated.
Nevertheless, while Mr Hall agreed property prices had already cooled slightly, he said there were still plenty of opportunities to make decent money flipping.
He said lower house prices could even help flippers enter the competitive housing market.
“If you put the right product to the market and keep the purchaser in mind you’ll have no problems selling property,” he said.
“The whole idea of owning your own home and renovating it is a big Australian dream – everyone wants to own property.
“There’s definitely still a future in it.”
So how do you make it in the flipping business? Mr Hall shared his top tips for flipping success.
DO YOUR RESEARCH
“If you’re looking to buy, educate yourself on the market – entry price is the most important thing. If you pay too much getting in, you won’t make dollars and cents at the end. I read heaps of books, and really annoy real estate agents on trends and what’s going on in the market. I always hassle them because they’re pretty much three months ahead of the market – they see what’s going on in the market before it hits the papers,” Mr Hall said.
“The main thing for me is getting in at the right price. Keep an ear to the ground in your market and don’t look at 10 different suburbs, look at two, otherwise you’ll just confuse yourself.
“On my way home I always drive a different way so I can see what boards are up and what’s going on. I’m a bit nosy, but you have to be if you want to do this seriously.”
“I have flipped 10 different projects varying from smaller properties and apartments to bigger houses. I really built my way up from something small into property worth millions now, and the way to get into it is to start small and learn from there – I’m self-taught.”
DO IT YOURSELF
“Hiring tradies can really chop into your budget. If you can always build on your skills and learn you will save yourself a hell of a lot of money, so the more you can do yourself the better off you’ll be at the end. Always use a licensed plumber and electrician, but for example if you have someone doing rendering, hang around and learn about a trade if you’re not experienced in it, so next time you can give it a go yourself and save big money.”
INVEST IN A GOOD FOOTPRINT
“My strategy is always renovating what is there – I’m not a new-build man, I’m an add-value man. I try to utilise the home’s footprint to add value. You’ve got to have a bit of forward thinking in terms of what you can do with spaces.”
KNOW YOUR BUYER
“Have a target market in mind. Whether it’s a family with children or a young couple, you need to do your research and tailor your design towards the purchaser. That’s the end game – it’s not necessarily for you, it’s about getting a sale from the right purchaser who will pay the highest price.”
The current state of Brisbane’s unit market is a viable option for investing in the capital city, a property specialist has claimed.
After reports by BIS Oxford Economics about Brisbane facing a unit oversupply, with around 20 per cent of its apartments remaining empty, Selena Corness, buyer’s agent at Universal Buyers Agent, said that right now is the right time for interested investors to enter into Brisbane’s market.
“Now is absolutely the time to buy and diversify your portfolio,” Ms Corness said.
“In the past 18 months, there have been a lot of new residential multi-storey unit complexes completed within a [two kilometre] radius of Brisbane CBD… [and] this has flooded the market and pushed prices down.”
As a result, Ms Corness said that buyers have panicked and pulled out. Investors can use this confusion to their advantage and find an entry point into the market via an affordable unit.
“By buying smart and taking advantage of the market, buyers are really in the driver’s seat,” the expert said.
“It’s a real ‘glass half full’ view — you could choose to see the doom and gloom side of the market and see it as half empty or appreciate it for what it is as a buyer: an opportunity.”
In order to enter the market, Ms Corness said that buyers need $300,000 in pre-approved finances, which will allow for investors to enter the premium markets of New Farm and Teneriffe.
“Not too long ago, living in these inner-city locations would have been a dream for most buyers, but now [that] prices are at the bottom end of the market, it’s a dream that can become a reality,” Ms Corness said.
“We know that prices will not continue to stay this low, so there is a lot of opportunit[ies] to make smart investments that will create great returns in the long term.”
As an example, Ms Corness pointed out how a unit developer cut its prices by nearly 25 per cent to try and sell its last units, from approximately $630,000 to $475,000, emphasising the room prices can grow back up to when the market corrects itself. However, deals such as this, she warns, are complicated to find.
“If you have $600,000 to invest in the Brisbane property market, my recommendation would be to split it and buy two units in different buildings aiming for an immediate minimum gross rental yield of 5.5 per cent,” Ms Corness said.
Amanda Wolski at 2837 Old Cleveland Road, Chandler, which is on the market for $1.15m. Picture: AAP Image/Josh Woning.Source:News Limited
HOMES in these suburbs earn double what the average worker does, raking in as much as $724.66 a night as their owners sleep.
Latest figures from realestate.com.au and CoreLogic showed the top 10 Queensland suburbs for capital growth in the last year came out of the southeast corner of the state, the bulk of which were in Brisbane and Ipswich.
Chandler in Brisbane’s southeast topped the capital gains of the 10 best performing suburbs in the state when it came to daily earnings, with homes there bringing in a whopping $724.66 a day without their owners having to lift a finger. At $264,500 for the year, that’s about as much as the average futures trader earned in salary last year according to the Australian Taxation Office ($264,830).
Homes in Yeerongpilly were making their owners $506.85 richer every day ($185,00 annually) – which was like having a petroleum engineer in your wallet ($185,808), while Indooroopilly houses were cranking out a $495.89 boost in value daily ($181,000p/a) which was a public servant deputy level salary ($181,849).
Top performer percentage wise was Kurwongbah in Moreton Bay (32 per cent), four of the top 10 suburbs were in Brisbane (Yeerongpilly 28.2 per cent, Corinda 25.6 per cent, Indooroopilly 22 per cent and Chandler 21.5 per cent), the same out of the Ipswich region (Willowbank 27.7 per cent, Brightview 23.1 per cent, Chuwar 21.7 per cent), and Boonah in Scenic Rim also made the cut (20.9 per cent).
Agent Nyree Ewings of LJ Hooker Birkdale-Wellington Point said Chandler’s big earnings were not a surprise given the size of its blocks and Goldilocks proximity to the city, ocean and Gateway Motorway.
“It’s the most affordable acreage with good access to the city,” she said. “That’s the exciting part – there’s a package for every style of acreage there.”
“The reason there’s been so much capital growth there is people wanting a good old fashioned lifestyle but still within reach of the city and water.”
She said entry level in the area was over $1m now such as 2837 Old Cleveland Road which has 2.36 acres, two four-bedroom houses and a massive eight car spaces.
Its owner Amanda Wolski put the Chandler property on the market for $1.15m – “an entry level price”.
“I know it’s a good area. I did build it 12 years ago. It’s just beautiful out here, private, it feels like you’re in the country but you’re just 20 minutes to the city, private schools, close to the Gateway Motorway. You can be on the coast in an hour. The location is just incredible.
“It’s been the most beautiful place to raise children, they’ve had horses, guinea pigs, been in the pony club for years, had motor bikes, go carts, chickens, geese, campouts, firepits. We will miss that most plus just the peace and the trees.”
Ms Ewings said the home was attracting developers looking to land bank as well as locals keen to get into acreage as well as people from outside the area.
QLD TOP 10 CAPITAL GAINS
1 Kurwongbah 32% gain; $452.05 a day; $79.33p/hour
With Brisbane’s market on the rise, the savviest of buyers are starting to zero in on 600 square metre sites with development potential.
It’s all because of the new City Plan, which according to experts, allows for subdivision of 600 square metre sites that are within 200 metres walking distance of a shopping centre and certain railway stations.
According to the plan, 600 square metre sites can now be split into two blocks of 300 square metres each.
However, Metropole Brisbane property strategist Brett Warren said there was a number of other strict requirements that would-be developers must understand.
“They also must meet site requirements like the right frontage, depth and shape of the block. While a train station is pretty stock standard, the shopping centre must be zoned correctly and be in excess of 2000 square metres,” he said.
Suitable sites at Mount Gravatt are as ‘rare as hen’s teeth’, according to local LJ Hooker principal Wayne Morgan. Photo: Supplied
Given it was a recent announcement, Mr Warren said it represented a solid short-term opportunity to buy and develop or land-bank.
It was still early days, he said, so it was important that novices did not try to “test the waters”.
“Thankfully we are starting to see these sites being developed and are in the very early stages of blocks either being sold off or development completed – so end values are there also,” he said.
“While it does represent a good opportunity, investors should seek professional advice as there is much higher room for error if you do not fully understand the new town plan.”
He said opportunities could be found in pockets of Everton Park and Stafford on the northside, as well as in Holland Park and Mount Gravatt on the south.
LJ Hooker Mount Gravatt principal Wayne Morgan said suitable sites were as “rare as hen’s teeth” in Mount Gravatt, mainly due to its robust property market.
He said developers were looking for sharp prices but sellers would probably do better just selling their homes to other owner-occupiers or investors instead.
While townhouse development in the area had been solid, he said, duplexes might struggle to make a solid enough profit.
“There is literally no duplex development because you’re paying too much for the land,” he said.
“You’ve nearly got to have at least four townhouses or three big townhouses to make it work and you’re really pushing it at the moment because land is [on] the way up.”
Part of the reason for increasing land values, he said, was the strong demand for property from people migrating into the wider area.
“The migration of people into Mount Gravatt and Mount Gravatt East is massive at the moment and they’re coming from the north and the south,” he said.
“The area has also become hugely popular for people coming in [from southern suburbs] who can now buy reasonable blocks of land, knock it over, and build a new house.”