Interesting to be running a flipping strategy in a downtrending market – this may allow you to get desperate sellers to accept lower offers of course.

The big risk in it all is that you’re swimming against the current and the market could drive down at a faster than expected pace – wiping out any potential profit.

Have you ever done a flip like this before? What’s your expected return, ROI etc?

I’d suggest sitting back and deciding on whether business or property comes first – if business this can delay you entering into the property market for some time due to finance requirements.

cash flow vs capital growth is a topic which has been debated since the dawn of time. Cash flow can be quantified and estimated accurately for the future, whereas capital growth is speculative. Be careful with apartments, generally they suffer from capital growth the most, especially if they’re lower end/student accommodation (not appealing to the owner occupier market).

Brett wrote:

For a bit of balance here – opposite to what Corey said OTP can be a very profitable strategy in the right circumstances. Example, Citi1 apartments in Wollongong. They were sold off the plan in 2011/12, have since appreciated by about 30 to 40% in value, have low strata fees and are in a good part of town. They were built without delay and have a good finish. Multiple other blocks in Wollongong that have had similar results. Depends on the market and timing. Wollongong has a lot of construction underway now so isn’t the opportunity it once was but I’m sure there’d be other markets that offer better value.

Indeed that is possible – but the same could be said just by buying a normal standard purchase in the same areas. The kicker for a lot of OTP deals however where there is strong growth is that most contracts have clauses wherein the developer can cancel the contract – which has regularly happened in the Sydney boom. Developers cancelled contracts on the buyers and resold them for 30%+ more, whilst the original purchasers found out they were no longer going to be buying their new home/investment – sad stuff.

Indeed – also a 3.99% 3 year fixed rate available for both investment and owner occupiers. This one won’t be around for long no doubt before it’s snapped up.

It really depends on the types of properties you’re looking at purchase, residential/commercial etc. There are options which will look primarily within the super structure – but this really comes down to the personal numbers.

When you say your business only covers costs – is this only business costs? How do you support yourself financially?

This is a space which is expanding quite strongly – we’ve recently taken on a financial adviser to start assisting clients with their SMSF’s.

DeanCollins wrote:

You’ve got variable rates….you should shop around.
St George will lend to expats, only condition as far as I know is max 70% LVR (though they waived it for us to go to 72.5% with our last purchase).

St George – fully owned subsidiary of Westpac Group. :P

Just call up Westpac saying you’re looking to leave the bank if they do not sharpen their pencil – this will usually get your rate in a most competitive space if possible.

You’ll find all banks do this – it’s in their T&C’s within the loan contracts. Sometimes lenders will inform customers of up and down movements – but there’s limited value in their eyes in spending significant funds in mailing every single customer to tell them they’re going to start charging them more – doesn’t look great in any case.

The rate you have currently is OK but not amazing – certainly can do better. We’re moving a lot of clients at the moment to another Big 4 which will rebate $1500 to the client for refinancings + provide PPOR and investment rates <4.4% (3.99% for owner occ fixes).

Terrible investments – highly restricted lending available which flows onto limited growth etc. The only people who generally make money out of retirement villages are the managers of the sites.

Holding right through that period was an absurd idea – I remember at the time most people who were actually investing in the areas went in knowing they should only hold for *months* before the market died. Same for all mining towns – a small shoot up whilst demand is strong and no new housing comes online – then SELL.

Sensationalism sells journalism in the end.

Generally I put it in as an email with the offer form, with all T&C’s completed. I always put in an expiry date (48-72 hours), so it puts pressure on the sales agent to have it reviewed and get back, instead of shopping the offer around to other buyers to see if someone will outbid you.