Flipping properties: a tradie’s investment strategy?

There aren’t many professionals who see as many properties as tradies.

Spending hours on site every day, you’re probably already familiar with jobs that improve the value of homes – but have you ever thought about doing it for yourself?

While you may know a bit about property flipping, you might never have thought about how valuable your experience could be to making an investment (or investments) of your own.

Post-lockdowns, property has boomed across Australia, up a huge 18.4% Australia-wide – our fastest rate of growth in over 30 years. So, how can you get involved, what are the advantages and disadvantages, and how might your know-how be put to use to add extra value and extra profits?

Think of this as your open-house inspection on all things property flipping.

Put simply, ‘property flipping’ is a strategy for investment that involves purchasing a property then selling it quickly for more than you paid initially.

This popular approach has rewarded plenty of investors. When it comes down to it, there’s just two broad kinds of property you’ll flip.

The first are properties purchased below market value, usually due to financial distress. This could be an apartment or house, and usually involves minimal actual work on the property itself.

The second is the classic ‘fixer-upper’ or renovator’s delight. These are all about potential – taking the existing property, investing in a cosmetic or structural facelift to add value, then selling on for a profit.

The pros

• Often a quick return on your investment, usually taking about six months.
• Can potentially be a safer investment than stock market shares.
•  It’s an opportunity to build a professional network, which can pay off on future investments or collaborations.
• Fixer-uppers are a chance to use your practical knowledge to add value, save money and become a better investor.

The cons

• Comes with its own risks, particularly when a property might have hidden issues that require strong, consistent cashflow to get to the point of flipping.
• Often a big time investment, requiring expert skills and construction knowledge, and making profiting a challenge.
• The costs of buying and selling properties will likely take away from profits.
• Your capital gains rate may be higher for owning a property for less than a year, and the income boost of a successful flip can bump up your tax bills.

The skills, experience and network you bring as a tradie really shouldn’t be underestimated.

Basically, it gives you a big advantage in mitigating several of the cons listed above: the costs, time, networking and knowledge needed to get the property to the point of being ready to flip.

But, not all restoration and refurbishments will pay off; it’s all about being selective. Quite often, it’s the simplest improvements that turn a property from a ‘no thanks’ into a ‘call the bank!’ – things like:

Cosmetic fix-ups

First impressions matter. Cosmetic improvements like a new coat of paint, new floorboards or tiles, or spruced-up landscaping often take minimal time, effort and money.

Kitchens & bathrooms

Think about it - an impractical kitchen or outdated bathroom has probably turned you off a property in the past. They’re at the heart of home lifestyle, so they’re worth getting right.

Structural renovations

Time-consuming and often expensive, knocking down walls and shifting rooms should only come into it if they’re genuinely preventing work you can’t do without.

Extensions

Throwing an extra level up top, or another room out the back? Provided it fits the budget, go for it - just make sure you’ve got approval from the council, okay?

The extras that make life easier

It might sound like extra expenses, but think about what you’d look for in the property – a pool will get used most of the year in Queensland, a patio will really help in Melbourne’s unpredictable seasons, and so on.

If the potential pros of flipping sound right for you, great! It’s an approach that can really pay off for tradies with the right skills and smarts to back them up. Here’s a quick checklist of things to keep in mind.

• Funding: Be confident you’ll have the money to get from buying to selling.
• Time: It’s as big an investment as cash, but potentially more valuable.
• Skills: Know where your experience starts and ends, and where to look for help.
• Knowledge: You can never know it all – stay across the market and all your project’s ins and outs.
• Patience: The potential stresses are real, so hold onto your stick-to-it-iveness and cool head.