Jan 23, 2019
Welcome to Finance & Fury’s Say What Wednesday
Today’s question is from Lucas, “Hey guess, just wondering if you think that flipping houses is a good strategy? Can you really make a living flipping houses?”
Good question! Flipping houses has become very popular but it’s not as easy as you think.
The Theory
Finding the property
It’s the same process for any property purchase (researching, etc):
Does this work? Here are some examples.
Buy something for $450k, with a 10% deposit (so, you’ll need $45k plus other costs)
Scenario 1 – $2 for $1 every spent |
Scenario 2 – $1.50 for every $1 spent |
|
Property Price |
$450,000 |
$450,000 |
Loan |
$405,000 |
$405,000 |
Purchase costs |
||
Legal fees, registration, pest inspection, etc. |
$2,500 |
$2,500 |
Stamp Duty (QLD) |
$14,175 |
$14,175 |
LMI (10% deposit) |
$7,938 |
$7,938 |
Total |
$24,613 |
$24,613 |
Renovation & ongoing costs |
||
Interest expenses - 8 months |
$12,150 |
$12,150 |
Renovation costs |
$80,000 |
$80,000 |
Total |
$92,150 |
$92,150 |
Selling fees |
||
Sale Value |
$610,000 |
$570,000 |
Agent fees, advertising |
$16,775 |
$15,675 |
Assessable Gain |
$67,850 |
$27,850 |
Taxes - CGT (If not living in and only income) |
$14,425 |
$14,425 |
The Bottom Line |
$57,037 |
$18,137 |
When it goes right:
Risks:
Other Options
In Summary
EVERYTHING needs to go right – it’s hard to make a lot of money if you don’t have much experience.
If you have any questions hit us up here at the contact page