To flip or not to flip? This is the question.
Reply: 2.1.2.1.3.2.1.1.1.1
From: Owen .
On 3/7/01 4:50:00 PM, Robert Forward wrote:
>Hi Owen
>
>What I do with flipping is
>that you'd sign the contract
>of purchase, thus no-one can
>come in and gazump you on the
>price. And if I put my name on
>the contract then I Onsold
>before settlement I can/will
>STILL be liable for stamp duty
>PLUS if you the person that I
>am onselling to decides to
>pull out then I am left
>holding the bag and having to
>go ahead with the purchase
>myself... And that is far to
>high of a risk, thus I don't
>work that way.
OK got it. This was the risk I had always thought about with flipping - getting stuck with the property with no exit.
>Flipping properties is
>completely different to
>Onselling properties. To FLIP
>is to provide you with a good
>purchase price and a
>positively geared property. To
>ONSELL is to sell the property
>on at market value.
OK no problem with the terminology or the principles here.
>The thing with flipping Owen
>is that the price I negotiate
>a property to is the price
>that YOU (the FLIPPEE)
>purchase the property at.
How do you know 1) that I want that property 2) that it's a price I will pay. I'm assuming you already have a relationship with me and are working on my behalf? Me being an investor I guess you know what I want ie I'm a developer or a renovator or a landlord etc.
>This property I am purchasing was
>going to be flipped, until the
>flippee pulled out.
This is your $84K property we are talking about? Definitely the risk, but not really a problem if your not on the contract. If not then why are you purchasing? Just a good deal?
>I am then due, upon settlement, my fee
>for negotiating the property
>to that price.
...prearranged with the Flippee?
>At no stage do
>I up the price of the property
>that I negotiated for you to
>purchase, basically I can't up
>the price because I don't own
>the property.
OK.
>All I do is find properties
>and negotiate to an extremely
>good price. You do your due
>diligence on the property and
>purchase it.
So you find the property based on what I want, negotiate the price and then I do title searches, comps, etc and decide if it a good enough deal for me to buy at that price.
>I don't always look for the
>buyer first, though I have a
>number of people that I can
>pass good deals to quickly. I
>am always looking both
>properties and people to deal
>with for flips.
This is the stumbling block for me. If you have a property, negotiated a price and have no-one to flip it to, what's keeping that price in place while you find someone? What's stopping you getting gazzumped? You are relying on your list of flippees being ready to buy from you.
>I hope the above clears the
>mud a wee bit.
Yes thank Robert. I had a "chat" with TW last night and was to write to you both for a better explanation. Got a bit sidetracked and you beat me to it. I think I may have answered a few of my own questions here but keep it coming if you have the time.
Owen