Flipping a brand new house?

Question

Was wondering is it still possibile to flip brand new houses (australia ) there for i would be able to use first homer grant to start my investor jounery ?

Lindsay Stewart · Answer

Actually Keiran there is a world of difference between AU real estate and US real estate, be very careful investing in the US using AU strategies, it simply won't work (trust me, i tried it for 2 years...)

And you would not be able to use an Australian first home buyers grant to buy a US property.  Has to be a property in Australia, and you have to live in it for a period and I believe it also has to be new properties (house and land packages or apartments).  You could however, purchase a property in AU, allow time for equity growth and borrow against that equity to invest.  In the US they call that a HELOC but we have similar here in Australia

Hai Loc · Answer

I totally agree it's pure speculative.. the sad part is lots of people have been making a killing on it.. its definitely not my cup of tea but I bought a few at the right time and to be honest got lucky.. I expected a 20% not 70% increase

The demand is still there.. and end users are buying these assignments because they want to move into a brand new condo now and not in 4 years..

For example there is a 2 bed condo selling for $800k.. it was purchased in 2016 for $500k.. the deposits added up to 20% $100k

So for someone to buy that contract they need to pay the original buyer $400k cash...

The remaining $400k will be required at occupancy closing..

End users are paying this today..

Aaron K. · Answer

@Hai Loc that seems highly speculative and leaves a lot of time for something to go wrong and depending on how much needs to be put down, the return does not seem worth the risk even if it was a small percentage of someone's investable capital.

Hai Loc · Answer

Pre construction condos in Toronto area are done all the time.. it would take between 4-5 years to be built and 6-12 months before closing buyers assign the builder contracts to end user for a massive profit.. especially the ones that are closing in 2020 they are being sold for 60-70% more than original agreement with builder..

Keiran Wilson · Answer

Thankyou exaclty what i need to hear. Also i doubt there would not be too much difference between the States and Aus.

Aaron K. · Answer

At least in the states this would not be possible for a couple of reasons

1. The loan would have occupancy requirements for how long you live there

2. There is nothing to fix so you there isn't any more value for you to get out of the property, if there was the builder would have done so, not to mention holding costs and realtor commissions

3. Generally you will face competition from the builder, why would anyone pay more for a slightly used house when they could have the builder build them a brand new house for less.