Flippin' heck!



From: Miakat .

He he. Needed an exciting title to get your attention.

For those of you who are flipping, are you simply putting on the contract 'and/or nominee' and then allowing your purchaser to take over the deal. They provide you with some cash for finding the deal? I hope I understand the concept correctly.

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Reply: 1
From: Miakat .

OK, I went looking and found this definition of a flipper.

Real estate, like any other commodity, is bought and sold every day of the week. Many people become real estate agents because they know a small piece of a large pie means big bucks. Agents help facilitate a sale by finding a willing buyer for a willing seller, earning a commission of approximately four to seven percent of the sales price for making the deal happen.

It is relatively simple to get a real estate license, and it is a lucrative field for many people. However, as you may expect, there is strong competition among agents, and the ones that are successful work long, hard hours. In fact, most agents are on call weekends and nights, with their cell phones glued to their ears. Furthermore, real estate agents are required to take continuing education classes and follow strict guidelines set forth by bureaucratic agencies. There are better ways for an "entrepreneur" to make a living!

The Flipper

Investors that "flip" houses accomplish the same basic task that real estate agents accomplish. Specifically, the "flipper" investor buys real estate with the intention of immediate resale for profit. As a flipper, he buys properties at substantially less than the going or "retail" rate. He acts as both principal and middleman, buying at one price, then reselling at a higher price. If a deal is marginal (not much profit) and he adds no value to the property, the flipper's profit is commensurate to that of a real estate agent. However, unlike an agent, the flipper may only have a few hours of his time tied up in the deal. Furthermore, the flipper's upside profit potential is much higher than an agent's commission, since an occasional bargain purchase can bring a tremendous return.

The flipper does not need a license to practice, nor is he under the oppression of a government agency. He benefits from low overhead, flexible work hours and he doesn't have to drive a Mercedes to be taken seriously (although he can certainly afford one).

Three Different Types of Flippers

There are three different types of flipper investors, usually based upon experience:

The Scout

The Dealer

The Retailer
The Scout

The Scout is an information gatherer. He is the "bird dog" who finds potential deals and sells the information to other investors. Many people get started as a Scout for other investors because it does not take any cash or prior knowledge to look for distressed properties. The Scout finds a property for sale, gathers the necessary information, and then provides this information to investors for a fee. The fee will vary depending on the price of the property and the profit potential. The Scout can expect to make five hundred to one thousand dollars each time he provides information that leads to a purchase by another investor.

The Dealer

The Dealer, like the Scout, locates deals for other investors. He locates a bargain property and signs a purchase contract with the owner. He then has the option of closing on the property and selling it outright, or just selling his contract to another investor. He is providing more than just information; he is controlling the property with a binding purchase contract. The Dealer often puts up earnest money to secure the deal, so he assumes more risk than the Scout does. Since the Dealer controls the property with a purchase contract, he has greater profit potential than the Scout does.

Dealers can flip as many deals as they can find. On a full-time basis, a Dealer can make well over fifteen thousand dollars a month without ever fixing a property or dealing with a tenant. On a part-time basis, a dealer could easily make an extra three thousand dollars a month flipping a property or two. The dealer's lifestyle is that of a true "entrepreneur." He can work as much or as little as he likes, with no boss, no employees and the freedom to do as he pleases!

The Retailer

The Retailer usually buys properties from a Dealer or with the assistance of a real estate agent or Scout. The Retailer's goal is to fix up the property so he can sell it for full retail price to an owner-occupant. Compared to other flippers, the Retailer puts up the most money, has the most risk and stands to make the largest profit on each deal. However, it may take the Retailer months to realize his profit, unlike the Scout or Dealer who makes his money in a matter or days or weeks.

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Reply: 1.1
From: Sim' Hampel

Great post on two accounts Miakat...

1. You answered your own question. Fantastic !

2. The post was very informative - one of the best I've seen describing the various types of flipping (I thought there was only one) and how they work.

I'd be very interested to hear any responses from the flippers out there as to how accurately this describes what they do.

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Reply: 1.2
From: The Wife

Pretty gosh darn close there Miakat!!!

I love it!

I was told by several people that I would like you, and that you're a pretty cool chick :eek:)

And its true!

Thankyou so very much for your resourcefulness', I'm sure there are a lot of people who appreciate it, me included.

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Reply: 1.2.1
From: Sergey Golovin



Where did you get it from.....?

Serge G.
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From: Miakat .

Try this site. It's American but full of useful articles for those who are into the creative side of RE Investing.



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From: Robert Longmore

so how do i become a dealer? i want to be one! :D
:D :D
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From: The Wife

Hey if your near Canberra, I can explain it to you , are you coming to the BBQ?
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From: William Blake

This may be a good opportunity to discuss the "and/or nominee" term when purchasing a property.

This is intended for purchases where one or all parties (purchasers) are not able to attend at the time of entering a contract. Particularly at an auction or when perhaps only the wife can sign the contract but the property is being bought by her and her husband.

I am under the impression that at the time of purchasing by and or nominee that the signatory/purchaser has to be entering the contract knowing who he is signing on behalf of.

In terms of flipping I think there is a legal issue in regards to stamp duty. If you are buying a property only to subsequently onsell to an unknown third party, then I believe that both you and the final purchaser are both liable for stamp duty. (could be wrong - please let me know someone)

Flipping is seen by some as a way of avoiding stamp duty -

William Blake
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From: Martin Dorney

Hi William,

I can only speak for victorian legislation:-
Initial purchaser and final purchaser do have to pay stamp duty on property purchase.

Initial purchaser or flipper sometimes do get away without paying stamp duty ( some do slip through the cracks so to speak), however highly illegal according to my specalist property lawyers.

The tax office is apparently clamping down on flippers severly, who avoid paying stamp duty. Heavy penalties/fines - major fraud.


That way the flipper avoids stamp duty legally and on-sells the property to the final purchaser, who definitely needs to pay the required stamp duty.

Hope to be of some help!
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From: Ms Flip

G'day All

Being one that flips properties. I'll let you know that when done properly the flipper DOES NOT pay stamp duty. I never buy the property so I never pay Stamp Duty, it's that simple.

There is a process that you follow. If you stray from it then you are liable. I am also not liable for any recourse onto myself by a flippee. Like what "Robert" has said previously, the flippee does their own Due Diligence and then decides to take the deal or walk away.


>The tax office is apparently
>clamping down on flippers
>severely, who avoid paying
>stamp duty. Heavy
>penalties/fines - major fraud.

This was very funny because the TAX office does not deal with STAMP DUTY thus is not concerned with it. It is done by the Office Of Revenue (or similar entity) on a state government level. So I think you may need to change your solicitor.

There are only half a dozen real flippers in this country. I know 3 of them, and none of them have been contacted by the ATO. The reason being is that it IS NOT illegal like your suggesting.

I actively flip through my company structure and provide receipts that are tax deductible and claim the earnings every quarter with my tax return. Flipping IS NOT MAJOR fraud, there is a process to flipping and done correctly it is all ok. I don't pay my solicitor and accountant $300ph for them not to set up correct processes.

It looks like everyone is somewhat confused on what a flip really is.

Let me say that when I flip I do not buy the property myself cheaply then sell it again quickly. This is known as "trading" properties (of which I'm known to do every now and then). This is the American style of flipping and it is simply trading of properties.

Anyway I'll leave that for everyone to ponder for awhile.

Happy Flipping

Ms Flip
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From: Martin Dorney

I apologize for the incorrect government department, silly me, what i meant was the State Revenue Office.

May i suggest Ms. flip that a different school of thought is if property is on-sold prior to settlement it is called flipping by some and not trading!

What i was simply suggesting was not that flipping properties was illegal, only that purchasing property by a INITIAL PURCHASER, be it a trader, flipper or flopper(depending on your definition), and on-selling the property as many do, is in fact illegal if stamp duty was not paid by the INITIAL PURCHASER, according to my solicitors.

A INITIAL PURCHASER is one who's name must appear on a contract of sale as '........' and/or nominee for example.

What your suggesting experienced Ms.flip, is that as a flipper, by your definition you do not buy/purchase the property - your name does not appear on the contract.

The mechanics of flipping properties can be different and varied i'm sure, whether its by definition the American,
Australian or Mexican style.

Happy investing.
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From: Paul Zagoridis


May I humbly suggest you are incorrectly using the term illegal?

Stamp Duty in NSW was thought to be compulsory on all conveyances of Real Property. 1 July 1998 the Stamp Duty act was changed to close a loophole that saw many (including myself) transfer property without paying any stamp duty whatsoever.

Was I behaving illegally? Not a chance! I paid a fortune for expert advice. I acted totally within the law.

It so annoys me when people mouth off about what's illegal. We are required to comply with the law AS DRAFTED.


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