Flip a house and make a massive profit
One of the fastest ways to make solid cash from property is by 'flipping' a house. That means buying a place that needs work, giving it a makeover and putting it back on the market at a higher price than you paid. Tim Gauci, commercial director at Design + Diplomacy in Melbourne makes a living out of it.
Tim and his partner Nicole Langelier have been so successful they now have agents coming directly to them and asking for help prepping properties before they're listed. Tim reckons there are some simple tricks of the trade that can help to maximise the value of a property. If you want to give it a crack, here's what you need to know.
Buy the right place
It's essential to buy in an area where there's growth and pick a property in the best street you can possibly afford. When Tim walks through a property to asses the potential, there's a number of things he looks for. 'We make sure there’s nothing structural or permit-based that needs to be dealt with,' he points out. Ultimately, you want to improve what's there rather than having to do the heavy lifting. That also means looking for problems that might put buyers off, like damp, mould and termites.
Once they're satisfied, they put a scope of work together. Tim says the key is not to get too emotional about the work or inject too much of your own taste, 'It's not a forever renovation, it just has to be campaign-ready.'
Prepare for the 'bag drop' moment
According to Tim, a 'bag drop' is when a prospective buyer walks into the inspection and can see there's nothing that needs to be done. Tim works on a lot of Melbourne's inner city homes in the million dollar range and says you need to make it appealing to a broad demographic without over-investing in a renovation. 'You want to spend as little as possible to get the biggest impact. In Fitzroy and Collingwood, $30,000 will make a ratty terrace ready.'
In a bathroom, make sure the waterproofing is good and replace the shower and vanity. This shouldn't cost much more than $1500 to $2000. A new toilet is only going to set you back $450, too. In the kitchen, ideally you'll only need to replace the cabinet doors and benchtops. 'You can do a good facelift for between $3000 and $4000.
In terms of light fittings, they'll replace old bulbs with downlights. If that's not an option, he'll seek out nice feature pendant lights.
'If we're lucky and the house is on a slab we'll do polished concrete floors,' Tim says. Failing that they'll strip the floorboards and re-polish. Carpet is also an option.
Next up: paint. For interiors, keep it simple. Tim says an antique white is best. For the property's facade, choose something that's contemporary and isn't polarising. You might choose a bold front door, but only if you're in a suburb where that's appealing.
Finally, 'make sure the garden is tidy,' Tim suggests. Just like that, a $30,000 spend can turn into a $300,000 profit.
Among his team's biggest challenges was 147 Easey Street in Collingwood, the scene of two brutal murders in 1977. When they were called in to flip this home, there were still remnants of the crime.
Flip it fast
When you're done, you'll need to style it, which might mean investing in professional staging. 'We plan the look around what colour paint we use and the carpet colour we’re working with,' Tim says.
'Cosmetic renovating a property you’re living in is a nightmare. It can be better to spend three to four weeks living somewhere else and put it straight back on the market,' he adds. Although that depends on where you've bought. 'In Fitzroy, Collingwood and Richmond, it’s not ideal. If it was on Domain, people will wonder why it’s on the market again, so you might be better to wait for a new season and new buyers,' he concludes.
Interested in flipping houses? Follow Design + Diplomacy on Instagram for inspiration.