- Sydney’s Property Flipping And Credit Mortgages: Profit Strategies
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Sydney’s Property Flipping And Credit Mortgages: Profit Strategies – Alex Beashel and her husband Aaron recently renovated a house on Sydney’s Northern Beaches into a forever home for their family of four.
Just minutes from a good elementary school, Beashel says key factors during the planning stage were bedrooms and living spaces that will adapt as their children (Austin, 3, and Lucia, 2) grow, plus a dedicated but separate home office for the couple . operate their respective businesses. “We wanted it to be really functional,” Beahel says of Elanora’s home.
Sydney’s Property Flipping And Credit Mortgages: Profit Strategies
Alex and Aaron decided to renovate their Elanore Heights property to create a home that had everything they needed for their young family. Photo: Nicky Ryan
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Bought for $1.55 million four years ago after selling their Sydney flat, the house had some glaring flaws; There was no garden or storage, Beashel remembers, and it desperately needed “and a lot of love”.
Cosmetic issues were quickly resolved, but the couple lived in the home for several years to understand what they wanted in the floor plan before working with an architect and Beashel’s builder on the design. Beahel says a $450,000 construction loan and $500,000 of savings went into renovations to get the house the way they wanted it.
The couple sold their Sydney apartment and bought a house in 2017 for $1.55 million. Photo: Nicky Ryan
“Our options were to either take out a loan or wait a few more years to save the extra money,” he says. “We decided to take out the loan so we could enjoy the house now, knowing that whatever extra we pay in interest will likely be recouped by increasing the value of our property.”
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Beahel says the result met the requirements. “It’s very flexible – there’s a second lounge with a big barn door that you can close off and that’s the children’s lounge. They can have all their toys outside and the rest of the house doesn’t look like little miscreants have taken it over.’
A generous yard with a house and a pool will keep a family of four busy for years. Photo: Nicky Ryan
Because the house is one story (“I feel like the stairs are going to be a dump,” says Beashel), there’s also a separate home office by the pool that the couple can leave at the end of the day.
Beahel says the investment in the pool and high-quality materials was important, knowing they would last for many years. “We spent more on different finishes than we would have if we flipped it,” he says.
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Knowing that this property could be their forever home, the couple invested in high quality materials and finishes for the renovation. Photo: Nicky Ryan
Kylieanne Simpson’s recent makeover was decidedly flip-flopping, and her focus was on changes that would be sold for a profit. Simpson, based in Rome, Queensland, has made cosmetic changes to the home “to make it more visually appealing to people” and decided to add an extra living room, which they believe will increase its selling potential.
Repairing cracks in the walls, upgrading rotting wooden windows to aluminum and adding attractive landscaping are Simpson’s major updates. He says small, well-considered changes can have a trickle-down effect.
Unlike Alex and Aaron, Kylieanne Simspon’s latest renovation was specifically focused on profit. Photo: Supplied
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After swapping out the “ugly old-fashioned” white kitchen worktops for threadbare gray, he lifted the rest of the existing cabinetry and “brightened up the whole room.”
Painting offers a huge return on investment, especially if you do it yourself. “Anyone can go to Bunnings and get paint,” he says. “You really have to look at the budgets and factor those budgets into everything you do.”
Nurse Simpson and her husband have been renovating houses on weekends for 25 years. He believes that flipping houses for profit is something anyone can get into if they are willing to use the financial resources at their disposal.
The most profitable renovation is not always the most expensive, as even small changes have the potential to add enormous value to your home. Photo: Nicky Ryan
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“We’ve borrowed money on almost all of our properties – variable credit or loans that don’t have high exit fees, so when you’re looking to sell you’re not paying thousands to get out. ” she said.
Acknowledging that “banks are complicated,” especially for those just starting out in the real estate market, Simpson says she used a mortgage broker who understood renovating for profit — a “wonderful” help. “They can actually look at different loans that might suit your personal circumstances,” he says.
Her recommendation is simplicity. “Don’t overcomplicate it,” he advises anyone making the first mistake. “You just have to look at something that’s structurally sound, reasonably well designed, that just needs to be updated and modernized.”
The information on this website is for general purposes only and does not take into account your goals, financial situation or needs. Tighter credit restrictions have seen house prices fall, which is bad news for investors and good news for first-time buyers. Photograph: Andrew Merry/Getty Images
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Australian prices fall for 11th month in a row and while it’s bad news for investors, first home buyers bide their time
Five years ago, banks were “falling over each other” to hand out loans, says Sydney-based IT manager Karl Sice, who bought his first investment property 15 years ago. It currently has six properties in its portfolio across Sydney, Melbourne and North Queensland.
But after roughly six years of uninterrupted, breakneck growth, Australian house prices are falling and the sounds from lenders have changed. The difference between now and five years ago, says Sice, is like “chalk and cheese”.
Sydney and Melbourne, the twin engines of Australia’s property price boom, are finally sputtering – largely thanks to a tightening of lending by financial regulator Apra and the aftermath of the banking royal commission.
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Across Australia, prices have fallen for 11 consecutive months. They are down 5.6% year-on-year in Sydney and down 2% in Melbourne over the past three months, the worst decline since Christmas 2011. It wasn’t long ago that prices nationally rose by 11% in one year. and 20% in Sydney.
And while it may not be a crash, it looks like it will be a long slide. This week Capital Economics predicted the coming fall would be the “longest and deepest” housing slump in Australia’s modern history.
But while that’s bad news for Sice and his fellow investors, it’s good news for hopefuls trying to buy their first home. While the market was once driven up by buyers’ fear of missing out, now they can afford to wait and see.
Rhi, who lives in the Illawarra region of New South Wales, south of Sydney, works in construction. He says he plans to bide his time and “get” his first home when the market bottoms out.
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“We’re getting married in October and then we have a honeymoon. By this time next year we were hoping to get our first house. But if it keeps going down, then we’ll wait to see what happens.
“Hopefully. The banking royal commission seems to be tightening the rules and people with interest-only loans can’t refinance, and it could potentially complicate things for baby boomers who have to give up their investment properties. A lot of millennials don’t want investment properties, we just want a place to live without a landlord.’
According to analysts, the fall in house prices is a direct result of new tighter lending standards introduced by financial regulator Apra in March and the work of the banking royal commission in exposing banks’ lax lending standards.
Apra set a cap on mortgage lenders, limiting the number of subprime interest-only loans to just 30% of new mortgages. Through April, the value of home loans across the country was down 1.6%. Banks were also ordered to carry out much stricter checks on borrowers’ income and expenditure to ensure they could afford the loans.
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Pete Wargent, a real estate analyst and coach, says the new rules mainly affected investors and speculators, removing an overheated market.
“It’s not a credit crunch, it’s a credit squeeze,” he says. “Investors are mainly affected, your average home buyer has seen a marginal impact on how much they can borrow.
“A lot of investors took out interest only loans in this period of 2014-2015 and will find that transferring that to new interest only loans will be harder than they think. It was gradual deflation and that was the intention.”
Prices and clearance rates have since fallen, with August’s national clearance rate barely above 50%. Shane Oliver, chief economist at AMP Capital, said the Fomo (fear of missing out) that drove investors into the bull market is now turning to Fongo (fear of missing out) as prices fall.
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Last month, data from Digital Finance Analytics revealed that Apra’s changes appeared poignant
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