Anatomy of a flip

Russ, Kay, if you have another look at the post which started the thread you will see that it isn’t about I buying a house so much as a discussion of how difficult it is to buy a house and make a reasonable profit on it.

I also hoped that the discussion would thence evolve into a discussion about another (real estate) approach of making money.

My words at the end of the post make this very clear when I said :

So what is the solution ?

Yes, I do have some ideas but it wouldn’t be a bad idea to first hear what others have to say.

Terry was kind enough to make some helpful remarks and you, Russ, also suggested that converting a block of flats into units perhaps may be a better way (of making some money).

Now, to address some of the other remarks you made Russ :

I agree that based on the figures quoted the profit isn’t worthwhile enough to go into the venture. That was the very conclusion I made in the post.

However, I had in mind finding someone to buy it on a wrap basis which therefore would make it worthwhile.

Wouldn’t you be better looking at other ideas that would be a little more lucrative ?

The whole idea of the post was that very purpose (i.e. finding/discussing a better way of making money).

Looking at the example which you brought forward (converting flats into units) I doubt I would ever be involved in buying flats costing about 77K each.

I am not saying that it isn’t a good idea. It is just that, personally, looking from a distance, I wouldn’t entertain that particular idea.

Basically because one couldn’t build them for that kind of money which makes me think that there is something wrong with the concept (or that they are too old and dilapidated).

If they were a good proposition they either would already in all likelyhood have been grabbed up by someone or in any event the asking price would be a good bit higher.

It is just that I would feel very uncomfortable about buying in a smallish town.
(It doesn’t necessarily follow that one cannot make money doing so. I am well aware that many people here are rather active in such kind of towns and appear to have done well).

To answer your question Celivia, one doesn’t get automatic council approval. There could be many reasons why Council may not grant consent to strata title.

Firstly, in all likelyhood an older style building wouldn’t comply with fire regulations and one may have to spend quite a large amount of money to make the building comply. Once one gets some quotes it may no longer be financially viable to spend that kind of money.

Other reasons may be that Council refuses to give consent because there isn’t sufficient parking on the site. Another reason for refusal could be that council in their wisdom feels that they shouldn’t give consent because it would remove a number of low cost rental accommodation from the market.

A developer would normally insist on there being a condition in the contract stating that the sale is subject to council approval being obtained.

Well Russ what about trying to be creative.

There is nothing wrong with getting an option
and putting a plan for strata titling into the council.

In the meantime you may be able to line up buyers. Perhaps the tenants are interested in buying a unit ? You wouldn’t know until you ask them.

However, this can only work if there isn’t any money to be spent on bringing the property up to the current fire regulation standards.

Actually that isn’t quite correct as one would likely be able to get finance provided one had both firm quotes for the alterations which may be required as well as buyers lined up (i.e. contracts exchanged for some of the units).

Pisces

Hi Russ,

If the floors are timber then there is a need for fire protection upgrading.

Pisces